CMA fines Ping £1.45 million for banning online sales of golf clubs

The Competition and Markets Authority (CMA) has found that Ping European Limited (Ping) has violated competition law by banning two UK retailers from selling its golf clubs online.  Ping has been ordered to end the sales bans and not to impose the same or equivalent terms on other retailers.

The £1.45 million penalty imposed on Ping is intended to serve as a warning to other manufacturers.  The CMA was satisfied that Ping was pursuing a genuine commercial aim of promoting bricks and mortar sales from its stores but it considered that this could be achieved through less restrictive means.  The level of fine imposed on Ping reflected the CMA’s finding that the website sales ban was imposed in the context of this genuine aim.

Restrictions on online sales by distributors continue to attract competition law scrutiny.  The starting point is that, in principle, every distributor should be allowed to use the internet to sell its products.

One thorny issue relates to the differentiation between "luxury" and everyday goods and whether certain restrictions on online selling may be permissible in the case of the former.  While the EU vertical restraints block exemption exempts selective distribution "regardless of the nature of the product concerned", the accompanying vertical restraints Guidelines state that, where the characteristics of the product do not require selective distribution, or do not require the applied criteria, such as for instance the requirement for distributors to have one or more brick and mortar shops or to provide specific services, such a system does not generally bring about efficiency enhancing effects to offset what the Commission describes as "a significant reduction in intra-brand competition" (paragraph 176).

While certain luxury or branded products might be candidates for efficiency and other justifications for restrictions which would be hardcore in other contexts, the competition authorities are reluctant to allow such restrictions on the mere assertion of the need for a personalised sales service.  The coming years will test whether the strict stance seen in cases like this is sufficiently malleable to address the challenges of the online age.

See, further, CMA press release of 24 August 2017.