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It's been a rough year for Navman, the Kiwi-founded satellite navigation company which faced supply chain disruptions earlier in the year and has now been slapped with A$1.25 million ($1.42 million) in penalties for forcing distributors not to discount its products in Australia.
Navman's unwelcome Christmas present came in the form of a Federal Court ruling in a long-running case taken by the Australian Competition and Consumer Commission that alleged Navman's Australian arm had engaged in "resale price maintenance".
This is where a supplier agrees with its distributors that the latter will sell its products at a certain price point and is often used to try and avoid aggressive discounting by retailers. Setting prices is illegal under Australian law and in February, a record A$3.4 million in penalties was levied on an Australian cosmetics company for the same type of behaviour. In addition to the A$1.25 million in penalties, Navman's former director Christopher Baird was penalised $80,000 and former sales manager David King received a $30,000 penalty.
Wrote Baird in an email to marine dealers in 2002: "There is only one issue that will stop Navman and that's discounting! I will not allow our great products to be prostituted - take the warning now!"
Navman said it had wanted smaller retailers to stop aggressive price-cutting to avoid complaints from its larger retail customers.
In his judgment in the Navman case, Justice Jacobson said: "The details of the contravention show that Navman's conduct was not merely deliberate. It was pursued in an aggressive and high-handed way by the company's most senior managers."
While Navman had acknowledged it set benchmark prices for its marine navigation products, the ACCC found that it had cut off supply of products to retailers who went below the price guidelines and had aggressively sought to stop discounting of its personal navigation devices by internet retailers.
ACCC chairman Graeme Samuel said Navman had engaged in resale price maintenance over several years and that the judgment served as a warning to companies seeking to control the prices at which their products were sold by retailers.
"When buying items such as GPS and other electronic goods, consumers like to shop around (including over the internet) in order to get the best deal.
"This encourages businesses to compete on price and, by taking advantage of this competition, enables consumers to buy at lower prices," said Samuel.
"This outcome should serve as a warning to other suppliers in this emerging GPS industry and to suppliers generally, that if they attempt to impose a benchmark price, or stop resellers discounting their products, they run a significant risk of breaching the Trade Practices Act, and the penalty for that may be severe," he added.
Founded by Auckland entrepreneur Peter Maire in his garage in 1986, Navman was sold to US conglomerate Brunswick in 2004 for $108 million. Brunswick later sold the navigation technology maker's divisions separately.
