Watchdog agency the Competition and Markets Authority (CMA) says Fender likely engaged in illegal price-fixing online.
The CMA says Fender’s European branch “impeded competitive online pricing” from 2013 to 2018. The US guitar maker imposed a minimum sale price on all vendors. The practice is known as resale price maintenance and it is illegal in Europe.
Fender is the world’s biggest maker of guitars — Stratocaster, Telecaster, and Precision bass are some of its storied sub-brands. The Fender Squier range has gained popularity among beginner guitar players. Some of the world’s most well-known Stratocaster players include Eric Clapton, George Harrison, Jimi Hendrix, and Stevie Ray Vaughan.
CMA says it has been investigating Fender since April 2018. The company was recently fined £25,000 ($30K) for concealing notebooks at its European headquarters.
Other instrument manufacturers are also irking regulators. Casio was recently fined £3.7m ($4.5M) in August for restricting discounts on digital pianos and keyboards. That fine was discounted after Casio agreed to co-operate with the CMA.
CMA’s senior antitrust director Ann Pope says companies need to compete fairly online.
“Shopping online can make it much easier to compare prices and hunt down bargains – this can be especially important for potentially big purchases like a guitar. We take allegations of resale price maintenance very seriously because it removes one of the benefits of the internet of making it easier to quickly find a better price by shopping around.”
CMA reports that guitars make up a big part of musical instrument sales in the UK. The UK instrument market is worth about £400m ($488M) annually. Online sales of instruments have grown to about 40% of the market. Fender’s control over online prices gives the guitar maker control over the resell market, too.
The watchdog organization has not made a final decision on whether Fender broke the law. Representatives from CMA will listen to Fender’s version of events before ultimately deciding the verdict later this year.