Fender fined £4.5m for breaking UK competition rules

The European arm of Fender has been fined £4.5m for breaking UK competition law after the guitar maker pressured online retailers to sell its instruments at high minimum prices.

It is the largest fine to be handed down by the Competition and Markets Authority for such behaviour, which prevents customers from shopping around for a better deal, and comes after keyboard maker Casio Electronics was fined £3.7m last year for the same offence.

Fender Europe, whose parent company created the famous Stratocaster guitar, told online stores to sell its instruments at or above a certain price between 2013 and 2018 and asked retailers to raise their prices if they failed to comply.

The CMA had the power to fine Fender an amount equivalent to up to 10 per cent of its global sales, but said it had reduced the maximum fine because the company had confessed in the course of its investigation.

Fender’s conduct “fell well below the highest standards we set ourselves and this is a matter of deep regret”, a spokesperson said. The person added that the group had “taken additional steps” to improve its compliance procedures.

It is the second time Fender Europe has been fined for flouting CMA rules, after the company was found to have hidden notebooks from the watchdog during a 2018 inspection of one of its sites in relation to its investigation.

An employee in the company’s East Grinstead office hid 10 notebooks, which where later handed over to the regulator, resulting in a fine of £25,000.

Andrea Coscelli, CMA chief executive, said: “It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price.

“The fact the CMA has imposed large fines on major musical instrument firms Casio and Fender in a matter of months should be a lesson to this industry and any other company considering illegal behaviour. Break competition law and you will face serious consequences.”

The regulator has now issued fines to fridge companies, light fittings businesses and digital keyboard companies for cases of so-called resale price maintenance, whereby a supplier and distributor agree on thresholds for the supplier’s products.

Guitars are estimated to account for a significant part of the musical instrument sector — which has annual sales of about £440m in the UK, according to the CMA — with about 40 per cent derived from online sales.