When Appealing A CMA Decision Can Increase Your Penalty: The Roland Appeal

Publication Date28 April 2021
SubjectAnti-trust/Competition Law, Antitrust, EU Competition , Cartels, Monopolies
Law FirmBristows
AuthorMr Stephen Smith and Aimee Brookes

In April 2018, the CMA opened five investigations in the musical instrument sector relating to alleged anticompetitive agreements and/or concerted practices. These investigations covered a number of different types of musical instrument, and each investigation concerned one of five of the most well-recognised brands (Casio, Fender, Korg, Roland, and Yamaha). In this post, we consider the recent ruling in an appeal by Roland of the penalty that was imposed by the CMA that resulted in an increase of penalty amount by loss of a settlement discount.

A statement of objections was issued to Roland on 24 March 2020, provisionally finding that, between January 2011 and April 2018, Roland had engaged in resale price maintenance (RPM) by restricting online discounting for its electronic drum kits and the related components and accessories. Roland settled the case, and an infringement decision was issued on 22 July 2020. A fine of just over '4 million was imposed on Roland - an amount that included a 20% leniency discount and a 20% settlement discount. In line with other RPM cases, the CMA had used a starting point percentage of 19% for the calculation of its fine. Roland subsequently appealed the level of the penalty to the CAT on the grounds that the 19% starting point was excessive, and the 20% leniency discount was too low. Roland didn't challenge the findings of fact made by the CMA; it continued to accept the full scope of the infringement found. It also accepted that the infringement was one deserving of a financial penalty.

The calculation of the penalty issued to Roland

In accordance with the Penalty Guidance, the CMA followed the six-step approach to the calculation of Roland's penalty.

  • Step 1 - a starting point of 19% of Roland's relevant turnover (the percentage was challenged as Roland's first ground of appeal).
  • Step 2 - a duration multiplier of 5.5 (no challenge made to this step).
  • Step 3 - uplift of 15% for the involvement of senior employees; uplift of 10% for committing the infringement intentionally; and discount of 10% in recognition of Roland's efforts to ensure future competition compliance (no challenge made to this step).
  • Step 4 - no adjustment for specific deterrence and proportionality (this was appealed as an alternative to adopting a different starting point at Step 1).
  • Step 5 - no adjustment was needed to prevent the statutory cap of 10% of global turnover from being exceeded.
  • Step 6 - 20% discount for settlement (which wasn't challenged...

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