ComCom poised to green-light Commerce Act exemption for HP

ComCom poised to green-light Commerce Act exemption for HP

HP is close to fulfilling its desire to sell direct to Kiwi end users online.

Oliver Hill (HP)

Oliver Hill (HP)

Credit: Supplied

New Zealand competition regulator the Commerce Commission is poised to grant HP New Zealand an exemption from competition law for its local online stores.

An exemption would allow HP to engage in what is called "resale price maintenance" (RPM) -- specifying the prices a third-party distributor will charge on HP products sold to consumers through the stores.

HP-branded products include desktop computers, notebooks, printers and related accessories. 

The commission today published a draft determination of its preliminary view that allowing RPM in HP's case was likely to lead to a net public benefit and a five-year exemption would be appropriate. 

HP New Zealand country manager Oliver Hill said the company was committed to continually improving the experience offered to customers. 

"We are proposing to bring a new, HP branded online store to the NZ market to meet customer needs in 2021 and beyond," Hill said. 

"The HP NZ online store will make a wide range of HP products available to customers who prefer a vendor led e-commerce experience. 

"We welcome the draft determination by the NZ Commerce Commission and look forward to a positive final determination."

As reported by Reseller News, HP applied for authorisation to engage in RPM in March

The company's application related to its online store, which was operated by a partner but ceased trading in 2020, and to any future HP online marketplace stores.

Exemptions can be granted under section 58 of the Commerce Act for arrangements that might otherwise breach the law if the regulator is satisfied the public benefits of the arrangements outweigh the detriments from loss of competition. 

Such an authorisation protects the applicant from court action by both the commission and private individuals. 

HP does not currently sell directly to consumers in New Zealand, but imports, distributes and supplies HP products here through its network of distributors, retail channel partners and resellers.

The proposed arrangements involve HP supplying products to a third-party distributor, described as a "logistics partner", which would on-sell direct to customers and receive payments from customers through HP’s e-commerce platform, the commission said.

HP would operate most aspects of the stores itself and set retail prices while the partner would hold stock, process orders, and deal with deliveries and returns.

HP argued that due to technological and commercial issues, the partner would need to take ownership of stock before sale and to be the retailer of record. 

This meant that as HP would be setting retail prices it may be engaging in RPM conduct and required the exemption to do so.

"Following the establishment of the proposed model for the HP online store in NZ, as part of HP NZ's direct to end-user strategy, if and when marketplace opportunities arise in the NZ market, HP will consider establishing HP (branded) online marketplace stores," the company's application said.

The commission considered the HP stores were likely to provide many of the customer-experience benefits claimed by HP, while the RPM for which HP sought authorisation was unlikely to cause any detriments.

Interested parties are invited to make submissions to the regulator by 5pm on 20 August.

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