The Office of Fair Trading is recommending that the ban on recommended retail prices (RRPs) on electrical goods be overturned.
It has advised the Competition Commission that the Domestic Electrical Goods Order and associated undertakings, which cover electrical goods such as TVs, AV systems and washing machines, can be removed.
The announcement follows an OFT review of the Order. The review found that since the Order was introduced in 1998, there have been several 'significant developments' which have led to improved competition and mean that the Order is no longer needed – not least, the growth of online retailing.
The original decision to ban RRPs was taken by the then Monopolies and Mergers Commission back in 1998, with the aim of improving competition in the market amid suspicions that some upmarket brands were refusing to allow their goods to be sold at a discount.
In fact, certain specialist audio products such as CD players, speakers and hi-fi amplifiers were exempt from the 1998 ruling, while others – such as TVs and DVD/Blu-ray players – were not, leading to a two-tier pricing system and much consumer (and retailer) confusion.
Under the current legislation, while we are allowed to publish an RRP on some products, we can't on others – relying instead on a 'guide price'.
Now the OFT seems to have recognised that the situation has become confused, particularly with the growth in online retailing, and says the rule should be scrapped.
Claudia Berg, director in the OFT's Goods and Consumer Group, says: "This recommendation reflects major changes over the past decade in the way consumers purchase household electrical goods, not least the growth of the internet.
"We are determined to ensure such industry-specific regulation only remains in place where it continues to be necessary to promote effective competition. Where it is no longer necessary, and we can use general consumer and competition law, we will always look to reduce regulatory burdens on UK businesses."
The Competition Commission is now considering the OFT's advice before deciding whether to overturn its 1998 order.
Jason Digwa, director at RGB, an independent store in Ilford, Essex, welcomes the move: "I think it would help stabilise the electronics market. For the retailer an RRP would set a benchmark, and consumers would be able to tell how big a discount they are really getting."
Digwa believes the final decision from the Competition Commission could take "several months".
Should RRPs be re-instated on all electrical goods? Let us know what you think in the comments box below.
