The lingerie company behind brands including Playtex and Wonderbra has been accused of price fixing with three department store chains.
It said that the three stores had agreed to set a fixed or minimum price for the Shock Absorber range of bras – once advertised by tennis player Anna Kournikova – and warned that the companies had potentially committed a “serious infringement of competition law”.
A statement issued by the OFT said that its provisional view was that each of the alleged nine agreements amounted to resale price maintenance. These were designed to increase the retail price of Shock Absorber bras in each of the three stores, applying on a national basis to a number of products within the range, it is claimed. The brand accounted for a 15 per cent share of the sports bra market at the time of the agreements, the OFT said.
Retail price maintenance, or price fixing, occurs when a supplier specifies the resale price of the product to retailers and the stores agree to the price set.
“The OFT takes allegations of price-fixing seriously,” said Ann Pope, senior director of services, infrastructure and public markets at the OFT. “Resale price maintenance limits competition between retailers and can lead to consumers paying higher prices.”
She added: “No assumption should be made at this stage that there has been an infringement of competition law. We will carefully consider the parties’ representations to the Statement of Objections before deciding whether competition law has in fact been infringed.”
House of Fraser and John Lewis both said they were “co-operating fully” with the OFT’s investigation.
DB Apparel and the stores can challenge the OFT’s findings before the regulator reaches a final decision in March 2014. If the allegations are upheld, the parties could in theory be fined 10 per cent of their annual worldwide turnover.
“We are confident that we have been operating within all laws and regulations and are very supportive of any initiative which ensures pricing policies are fair for our customers,” said a spokeman for House of Fraser.
John Lewis added: “John Lewis always strives to operate within the law and comply with regulations.”
Debenhams denied the allegations, saying it “disputes” the OFT’s claims.
It said: “Debenhams disputes these provisional findings of the OFT, but is not in a position to comment further at this stage. The matter is being dealt with by its external lawyers.”
Shock Absorber sports bras are currently on sale at all three department stores with prices ranging from £18 to £38, depending on the design. DB Apparel UK, which has its head office in Woking and manufactures its products at seven facilities around the world, said: “We reject any allegations by the OFT that we have entered into any agreement or understanding with retailers as to their retail prices of our products.
“We have been transparent with UK authorities since the beginning of this process and will continue to defend ourselves vigorously in this investigation.”