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OFT closes investigation into Yamaha musical instruments

132/06    8 September 2006

The OFT has closed its investigation into a discount scheme being offered by Yamaha-Kemble UK ('Yamaha') under Chapter I of the Competition Act.

In December 2005, the OFT opened a formal investigation into Yamaha's discount scheme for its high-end digital pianos and keyboards following complaints from dealers. The scheme, which Yamaha launched in July last year, offered discounts which rewarded face-to-face sales of high-end electronic pianos and keyboards. The scheme was retrospective, and applied to total number of sales by dealers. The amount of discount offered was dependent on the ratio of face-to-face sales versus distance sales including via the internet.
 
The OFT expressed concerns that Yamaha's scheme restricted distance sales, and that it acted as a price-stabilising measure which was targeted at dealers who were seen as 'discounters.' However, before the OFT came to a final view, Yamaha took the decision to withdraw the scheme. Yamaha has since announced a new system for offering discounts to its retailers which does not share these characteristics.

The OFT acknowledges that Yamaha has co-operated fully with the investigation, and having carefully weighed all the relevant factors, including the short duration of the potential infringement, has concluded not to continue with the investigation. Consequently the OFT has decided to close the case and will not be imposing a financial penalty on the company.

NOTES

1. The EC Treaty and the Competition Act 1998 both prohibit anti-competitive agreements. Article 81 of the EC Treaty ('Article 81') and the Chapter I prohibition of the Competition Act ('the Chapter I prohibition') apply to agreements which prevent, restrict or distort competition. The Competition Act provides the OFT with various powers to investigate suspected anticompetitive behaviour. Section 25 of the Competition Act provides that the OFT, acting on its own behalf, may carry out an investigation if there are reasonable grounds for suspecting that an agreement, decision by an association of undertakings or concerted practice falls within Article 81 and/or the Chapter I prohibition.

2. Yamaha-Kemble Music UK Ltd ('Yamaha UK') is a fully controlled subsidiary of Yamaha Japan (87.5 per cent is owned by Yamaha Japan with the remaining 12.5 per cent privately owned by the Kemble family) based in Milton Keynes and deals only in traditional and electronic musical instruments.

3. Yamaha UK had a turnover of just under £70 million for the year ending March 2005. A substantial proportion of that was in the wider relevant market, the retail value of which is thought to be around £140m annually.

4. The OFT sought information from a significant number of dealers during its investigation.

5. On 27 April the OFT launched a fact-finding study into online shopping which is ongoing.

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