Commission authorises HP New Zealand to engage in resale price maintenance

The arrangements will give HPNZ the ability to continue to set the prices at which HP products are sold to consumers in New Zealand through the HP-branded Online Stores. It does not affect the pricing of HP products sold through any other channel, including through major retailers.

Although HP runs the HP Online Stores, products on those stores are sold to New Zealand consumers by a local third-party distributor. HP requires authorisation to control the price at which that third-party sells the products. Unless authorised by the Commission, RPM is illegal under the Commerce Act.

In 2021, the Commission authorised the conduct for five years to allow for the benefits and detriments of the conduct, which were theoretical at that time, to accrue. Evidence suggests there were no detriments and net benefits resulted from the conduct in 2021, although these were likely small.

“We are of the view that the arrangements continue to have no real detriments and some small benefits,” Commerce Commission Chair Dr John Small says.

“Based on the small share of sales through the HP Online Stores across the market as a whole, and the strong inter-brand competition HPNZ faces for the relevant products, we consider a ten-year term for this arrangement is appropriate.”

A copy of the Commission’s written reasons for this decision is available on the case register.

Background

HPNZ’s parent company, HP Inc., is a manufacturer of HP-branded technology products including desktop computers, notebooks, printers and related accessories and supplies. HP imports, distributes and supplies HP products in New Zealand through its network of distributors, retail channel partners and resellers for resupply to consumers and business customers.

HPNZ currently operates the HP-branded online store in New Zealand, but it does not sell direct to consumers in New Zealand. Instead, under the terms of the existing authorisation, it sells goods to a local entity, which then transacts with the consumers purchasing goods from the HP Online Stores. HPNZ currently controls the retail prices at which that local entity sells those products through the HP Online Store and it is seeking to continue that pricing arrangement. Because this amounts to RPM, the Commission previously authorised this arrangement in August 2021 for five years, and this authorisation is due to expire on 31 August 2026.

HPNZ does not control the retail prices at which that local entity sells HP products through other channels, and the conduct does not affect any other distributor or reseller of HP products including major retailers.

Authorisation requirements

The Commission may grant authorisation under section 58 of the Commerce Act 1986 for agreements that may breach the Act if it is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.

The Commission’s Authorisation Guidelines explain when anti-competitive agreements that may lessen competition or which contain a cartel provision can be authorised under section 58 of the Act, and our process for determining applications.