Retail Price Maintenance: What It Is & Why It's Restricted

Retail price maintenance (RPM), also known as resale price maintenance, is a vertical price restriction: a supplier requires a retailer to sell a product at or above a specified minimum price. It is generally illegal in the UK and the EU. 

What Counts as Retail Price Maintenance? 

RPM takes two forms:

• Direct RPM — the supplier instructs the retailer to sell at or above a set price.
• Indirect RPM — the supplier enforces a price without stating it as a rule: threatening to stop supplying retailers that discount, imposing penalties, or offering incentives to those that hold the price. 

Suppliers often set a Recommended Retail Price (RRP), and retailers are free to set their own prices. However, if a supplier uses any threat, penalty, or incentive to enforce the recommended price, it can still be classified as RPM. The CMA's guidance on resale price maintenance explains that an RRP is not RPM when the retailer remains free to set its own price, but that threats or incentives to enforce the recommended price can amount to RPM. 

Why Is Retail Price Maintenance Prohibited in the UK and EU? 

Retail price maintenance is generally prohibited in the UK by the Chapter I prohibition in the Competition Act 1998, part of the UK's wider regulation and competition policy framework. The CMA regards RPM as a ‘hardcore’ type of restriction under UK vertical agreement legislation. The same is true within the EU, where RPM is treated, under EU vertical agreements legislation, as a ‘hardcore’ restriction because it prevents retailers from setting their own resale price.

The economic concern is that RPM removes intra-brand price competition: retailers selling the same product can no longer undercut each other, which can keep prices above a competitive level and reduce consumer welfare. RPM is a form of vertical price-fixing that produces similar effects to collusion. The CMA fined Roland and Korg a total of £5.5 million for restricting online discounting by requiring retailers to sell their musical instruments at or above specified minimum prices.

Is There a Case for Retail Price Maintenance?

There is a case on the other side. Defenders of RPM argue that it stops discounters free-riding on retailers who invest in showrooms, demonstrations and advice, and that guaranteed margins fund that pre-sales service; suppliers also argue it protects brand positioning. UK and EU authorities accept these arguments only exceptionally, which is why RPM is treated as hardcore rather than assessed case by case.

The Classic Example: The Net Book Agreement

The Net Book Agreement (NBA) was the UK's best-known fixed book price scheme, allowing publishers to set the prices of books. Established in 1900, the NBA collapsed in 1995 when several major publishers withdrew, and was formally ruled to be against the public interest by the Restrictive Practices Court in 1997. Supporters argued that fixed prices helped independent booksellers compete with larger retailers, while critics argued that the NBA restricted competition and kept prices artificially high. 

Following the end of the NBA, book discounting became more prevalent, as both supermarkets and online retailers entered the market. The NBA remains a useful example of the potential benefits and costs of fixed resale prices. 

Where Limited Exceptions to Retail Price Maintenance Apply 

The prohibition targets minimum prices. A supplier can lawfully set a maximum resale price or cap, and can recommend a price, provided the retailer is free to sell for less.

Under the UK's Vertical Agreements Block Exemption Order (VABEO), RPM is a hardcore restriction, so an agreement containing it loses the benefit of the block exemption altogether. A supplier would instead have to show the agreement meets the individual exemption criteria in section 9 of the Competition Act 1998. The CMA accepts this may be possible in narrow cases, such as a short-term low-price campaign within a franchise system or the launch of a new product. In practice this is a high bar, and the CMA treats most RPM as a serious infringement.

The UK and EU now operate separate competition-law regimes, and some EU countries, including France and Germany, maintain national fixed book price laws for cultural-policy reasons. These rules should not be treated as a general exemption from RPM, which remains a serious competition concern in both the UK and EU.