Commission makes ruling on advertising row

A supplier of an iPod-related product to Dick Smith Electronics has run foul of the Commerce Commission.

Digitalblue supplies speaker systems commonly used in personal media devices such as iPods.

The commission today warned Digitalblue Ltd that it risked breaching the Commerce Act when it told Dick Smith not to advertise the music accessory at too much of a discount.

In November 2005, a Digitalblue employee sent an email to an account manager at Dick Smith saying that the IM7 iPod accessory should not be advertised for sale at less than 95 per cent of Digitalblue's suggested retail price.

The email said that if Dick Smith advertised the product at more than 5 per cent discount Digitalblue would stop supplying it to them.

Dick Smith complained to the commission which concluded Digitalblue was at risk of contravening, or attempting to contravene the Commerce Act.

The Act prohibits a supplier from inducing, or attempting to induce a reseller not to sell goods supplied by the supplier for less than a price specified by the supplier.

"Digitalblue should consider very carefully the implications of any future communications with retailers regarding retail prices for goods. This kind of communication must not occur again," commission general manager Geoff Thorn said.

The commission's warning is not a ruling of law as only the courts may determine whether conduct is in breach of the Commerce Act.

- NZPA