The worst Shonky in the nation - The ACCC

Yes, the Australian Competition & Consumer Commission. Read on.

Several years ago the shonky ACCC did a deal with a company called Tooltechnic Systems Australia, whereby the company was allowed to engage in retail price maintenance (RPM), by simply paying the ACCC a bucket of money. It has been impossible to obtain Festool and Fein products in Australia from a retailer at any kind of discount. In 2018 the ACCC asked myself and others to comment on a re-negotiation of this shonky deal which disadvantages consumers. I wrote a several page rebuttal of Tooltechnic’s application. The ACCC ignored my missive and accepted a further payment from Tooltechnic.

I should add that the parent company (Festool) in Germany was fined millions of Euro for precisely this kind of thing. Rather than risk a serious fine here in Australia, Tooltechnic realised that the ACCC could be ‘bought off’ for a mere few thousand Dollars.

Australians suffer with the useless ACCC running things.

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Hi @Zaphod, welcome to the community.

Do you have any evidence that this was the case?

The ACCC in its determination agreed that setting a minimum price may disadvantage consumers, however, it also had to weigh this up against the:

large network of Festool/Fein dealers the certainty they need to invest in facilities and staff to provide better levels of pre- and post-sales retail services. This results in consumers being able to make more informed decisions about the purchase and maintenance of these relatively complex products. The ACCC considers that this may also be likely to result in increased service-based competition between Festool/Fein power tool dealers (particularly enabling smaller dealers to better compete with larger dealers) and promote inter-brand competition.

Further, while there is clear detriment in this case, it is likely to be reduced by the fact that Festool and Fein have relatively low market shares and face numerous competitors.

The ACCC recognises through its statement of reasons that the arrangement that Tooltechnic Systems Australia sought may have disadvantages to the consumer, but not allowing the arrangement to exist may increase the disadvantage to consumer through reduced servicing competition. It appears that that ACCC viewed that the reduced servicing competition may have disadvantaged consumers more than the minimum discounts set by ToolTechnic.

As you outlined, the ACCC asked for views from interested parties before making its determination, and those who felt like they may have been disadvantaged (like yourself), had the opportunity to lodge a submission for consideration. The ACCC has been upfront in relation to the process used.

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The evidence is contained within the ACCC documents from 2014. I will attempt to locate them. My recollection is that the amount paid by Tooltechnic was $175,000.00, which entitled the company to engage in RPM.

The response from Tooltechnic and the reasons set out by the ACCC are completely bogus. I will explain why:

I own many power tools from various companies, including Festool. I refused to pay the ridiculously high prices charged by Tooltechnic, so I imported a Festool saw, direct from a German retailer. The landed cost was AUS$540.00. The same tool cost AUS$1,100.00 here in Australia. Tooltechnic, in concert with Festool Germany has managed to shut this loophole down. The saw I purchased is no more complex than a similar Bosch saw I also own. Same deal with other Festool products.

Now, here’s the kicker: Festool products come with a comprehensive and clear instruction book. Usually, in several languages and totalling 30 ~ 50 pages. A light and informative read.

3 years ago, I purchased a brand new Subaru Levorg at a discounted price. The discount amounted to around $5,000.00. The handbookS total some 60mm thick. Probably in excess of 400 pages. The car and it’s systems are EXTREMELY complex. Vastly more complicated than any power tool on the planet. Yet I was able to negotiate a discount by playing three dealers against each other.

Which is how it should be. Festool retailers are not brain surgeons, nor are they selling products that are as complex as (say) a mobile 'phone or a laptop. They are just power tools.

The ACCC is complicit in allowing Australian tool purchasers to be ripped off. It’s time the ACCC was called to account. The ACCC is either stupid or corrupt. They’re just power tools!

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I doubt they are corrupt or stupid, but their scope is not always what a consumer expects because of legislation and the inclinations and ideology of leadership, and importantly how the ACCC can be ‘guided’ by larger or smaller budgets.

Festool is not unique. There are appliance (and some other) manufacturers such as Miele (and others) that maintain RRP through selling through agents acting on their behalf rather than as retailers. Local Miele appliance prices are also roughly twice the price as in the EU; as is the case with the others with similar business arrangements. On balance Miele is not cheap but has good products and a support network, for a price. Other manufacturers have cheaper products, competition, and some good and some spotty service and support, and one is able to buy their products.

Likewise, consumers have the option of not buying Festool under the current arrangements. What is the balance between allowing the loophole of ‘agency’ for RRP, or the supplier potentially leaving the market for individual imports?

A consideration is that in our small and remote market if there is insufficient scale to fund a support network, that $AUD540 landed import with a problem could turn into a nightmare without warranty or perhaps any local parts/repair services.

I am not siding that it is right, or defensible or indefensible, it is just that I recognise some of the trade-offs they make in some of their business friendly, consumer disadvantaging, decisions.

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And my point is that Tooltechnic and the ACCC listed bogus reasons for allowing RPM for Festool products. They’re power tools. As such, they are WAY, WAY less complex than a modern car, like my Subaru (which I purchased at a healthy discount). They’re even far less complicated to set up and use than a mobile 'phone. I don’t know about, nor do I care about Miele products. I am focused on Festool products. If Miele came to a similar arrangement with the ACCC (ie: Giving them a bucket of money, so they could allow consumers to be ripped off), then that, too, should be good reason to expose the ACCC as an entity that, instead of defending consumer’s rights, is one that defends the bottom line of large corporations. I remind you at this time, that Festool has form in this area. It was fined MILLIONS of Euro for RPM activities.

My Festool saw is not a complex product and spare parts would, presumably, be available from Tooltechnic, or overseas sources. It is identical to products sold in Australia, should I ever need it repaired. No nightmare there.

Also, FWIW: Two years ago, I purchased some Bosch professional tools (at a significant discount, I might add). The tools came with a full 12 month guarantee. At roughly year two, through my own incompetence, one of the tools jammed (it was a $500.00 rotary hammer drill). I took it back to the retailer, who was unable to un-jam the drill. It had to be sent back to Bosch for service. 10 days later, the retailer called me and told me the tool was ready for collection. I dutifully charged my wallet with plenty of cash, only to be told that the drill was repaired free of charge. Pretty good, considering that:

a) The tool was well outside the warranty period.
b) The fault was entirely mine and would not be covered by warranty anyway.

You can guess that I see little reason to pay for any Festool product nowadays, when there are other companies that allow discounts on quality tools. Bosch now have a SIX year warranty on both battery and tool for their professional range.

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Irrespective of the prior history, the ACCC may have been sensible in leaving Festool and it’s importer to continue their practice. In an open market there could be only one outcome for Festool if it chose not to be competitive on price for similar performing and quality of products. I’d not pay the premium either. There are plenty of quality alternatives in trade quality and regular DIY models.

The same could be said for the new motor vehicle market where certain marques in Australia cost well above the premium one might expect given the drive away deals available in the EU. The need to provide nation wide support put low volume brands at a disadvantage. True power tools are not that complex, but then neither is routine servicing of a modern motor vehicle. Similar models from Audi, VW or a Skoda make for interesting comparisons.

Value is relative to use and need.
I’m aware of a number of tradies who will even happily buy Bunnings Ozito branded products. Because the need is infrequent or light duty and the value superb.

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I agree with most of what you stated, but that is not the point. The point is that the ACCC is enabling companies that wish to practice RPM. The ACCC is supposed to be acting for the consumer, NOT for large companies.

I would like to see ACA take aim at the ACCC for acting against consumers.

While one personally may not agree with the ACCC determination, it is worth reading as they have to weigh up both the impacts on the consumer for allowing and not allowing RPMs in the case of Festool.

As outlined above:

It appears that the ACCC believes that in balance, the RPM is better interests of the consumer than lack of competition within the marketplace.

While such a decision may not be acceptable to all, one needs to recognise the challenges the ACCC has in determining what, in balance, is in the overall interest of the consumer.

Just because one may not agree with the ACCC decision, it does not mean that the ACCC is either ‘stupid or corrupt’ nor ‘bought off’.

If you have evidence that the ACCC is ‘corrupt’ or has been ‘bought off’, this is very concerning to any Australian and I suggest that you lodge a complaint with the Department of Prime Minister and Cabinet.

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What does:

“reduced servicing competition.”

mean?

I see things more simply than you do. Tooltechnic pulled the wool over the eyes of the ACCC, by bribing them with a bucket of money. This allows them to maximise profits and cause consumers to pay higher prices than they otherwise should.

And, make no mistake: The arguments put forward by Tooltechnic are utterly without merit. Here’s why:

  • The products are not significantly different to other products in the marketplace.
  • The products are not amazingly technologically sophisticated. IE: They are far less complex than a (say) mobile 'phone.
  • There are several Festool retailers in my local area. Not one stocks the Festool MFT3 (which is a workbench). None know anything about the product and cannot, therefore, provide technical assistance to a consumer. Yet, Tooltechnic, in their submission to the ACCC claim that their retailers possess some kind of secret knowledge about Festool products. I call bull**** on that claim.

This whole thing is a money grab by Tooltechnic, ably assisted by the ACCC. It is well past time that ACA called out the ACCC for sitting on their thumbs.

I take that reduced servicing competition meaning that some service agents may decide not to service the products due to the reasons outlined by the ACCC. This reduces the competition within the marketplace and number of service agents available for consumers to repair or service any of the particular brand of tools.

This has two fold impact, the first is upward pressure on servicing/repair costs as a local monopoly may be created. Under an local monopoly, service agents (would be aware of the local monopoly) may chose to charge more for repairs/services for these products.

The second impact is in some areas it may in effect cause a barrier to purchase, thus exacerbating the number of service agents willing to provide service. The flow on effect is it reduces competition in the tool market and could disadvantage consumers with out of warranty products. Out of warranty products needing servicing/repair may need to be transported some distance to the nearest service agent at the cost of the consumer, where these service agents are likely to already be charging more for services/repairs.

The ACCC can’t control what service agents charge as it is an unregulated market. If they regulate this particular company/brand, then they would have to do likewise will all service agents/tool companies. This would potentially remove competition from the marketplace.

Also with tools, there is likely that there are competitors to the Tooltechnic brands and if one doesn’t like the pricing or potential after sales support, one has the option to purchase models from other companies.

You are yet to provide any evidence that this is the case…that there was bribery, corruption or some shady deal between the ACCC and Tooltechnic. It appears that you disagree with the ACCC decision and think something sinister is behind their decision as they failed to agree with your own position. This doesn’t mean that something shady occurred. Government and their agencies make decisions all the time which may not be agreeable to everyone, but doesn’t mean that these decisions are corrupt or result from bribery.

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From the ACCC site:

It is illegal for suppliers to:

  • put pressure on businesses to charge their recommended retail price or any other set price, for example by threatening to stop supplying to the reseller*
  • stop resellers from advertising, displaying or selling goods from the supplier below a specified price.*

It is also illegal for resellers to ask their suppliers to use recommended price lists to stop competitors from discounting. In most cases, a supplier may specify a maximum price for retail.

That seems very clear to any right thinking Australian. And yes, I was engaged in hyperbole when I mentioned the word ‘bribery’. I do not, for one millisecond, believe that the payment was unlawful. What is seriously shonky though, is the ACCC accepting money, under dubious circumstances, to allow a supplier to violate Australian law. This needs to be called out by ACA. The Australian public should be informed that the organisation which is designed to act in their interests is, in fact, acting in the interests of large businesses.

And here’s the thing: I was able to source a Festool product direct from a German retailer a few years back. Thanks to the intervention of Tooltechnic and in concert with Festool in Germany, the ability for me to source Festool products from Germany has been shut down. This act suggests that the Tooltechnic is solely concerned with protecting it’s profit margins. And I can’t blame them for that. A business will use any legal means to do just that. However, the ACCC is supposed to act to ensure consumers are not being ripped off. Instead, the ACCC is acting to assist Tooltechnic in the protection of their bottom line and the bottom line of all their retailers. The reasons claimed by Tooltchnic and the ACCC for RPM in respect of Festool products does not stand up in the light of day. It merely mirrors what the parent company has been doing in Europe for many years. Gouging consumers. The company was fined millions of Euros for doing just that. Our ACCC, instead, works to allow consumers to be gouged.

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It is reassuring to know that. Some of the community take what is said literally and factually. Some see past the obvious.

The ACCC is often a source of frustration as the community oft remarks. If the issue is the performance of the ACCC is there any other point relevant, other than the observations re Festool? It’s worth pointing out that what Festool do in Europe may be of little concern to the ACCC. It may be of interest only.

The role of the ACCC as government sees it https://treasury.gov.au/sites/default/files/2019-03/ACCC_Statement_of_Intent.pdf

It suggests that the overall intent is to put business ahead of consumers, enables autonomy and provides for discretion in determining balance.

Is balance in the instance of Festool that consumers are not locked into buying from Festool? The ACCC has settled a concern with an agreement and the payment of what is effectively a fine from the ACCC. It has such powers to reach negotiated settlements. Whether Festool retailers pay any attention to pricing from the Australian importer/supplier, they are legally protected if they approach the ACCC.

I’ll just note that Festool products are available from large tool specialists who are not likely to care too much for any impropriety from a supplier.
One such supplier lists a long list of products and accessories. Many of these provide for niche trade specialties. It is not uncommon for low demand products in Australia to have premium pricing. I blame our often inefficient importing agent and distribution chains in part, lower volumes as a second point and limited competition.

Is the real concern here that Festool Germany is blocking direct sales from Europe to Australia?

In that instance the situation is far from unique across many products made OS. The ability of the ACCC to act against the foreign entity may be limited and the resources required from the ACCC substantial. Is Festool worth the effort?

What ever our concerns the international market place is far from a level playing field. I would not blame the ACCC for that.

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Retail price fixing annoys me. Big time. Also, it’s illegal. What annoys me more than retail price maintenance, is when a government agency is complicit (an unkind person might say they were bribed) to turn a blind eye to retail price fixing. The ACCC accepted a payment of almost $200,000.00 from Tooltechnic to allow the illegal practice of retail price fixing to take place. Worse, the parent company in Germany was fined EUR 8.2 million for exactly the same thing! Not here in Australia. The ACCC accepts a measly 200 grand to allow the company to screw over buyers.

Surely Choice can do something about this? I’ve sent many messages to the ACCC and they have spun the same lies that Tooltechnic have.

Hi @Zaphod, Your recent post is related to this one you started last November, so I merged it.

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Thanks for that.

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According to the ACCC decision per the original post in this topic, the ACCC has acted within its authority.

I could find no reference to any $200,000 payment to the ACCC in respect of the most recent decision under the revised (2017) legislation. The ACCC did say-

This is the first RPM notification received by the ACCC since amendments to the legislation commenced in 2017. It should not be assumed that because the ACCC has allowed this notification to stand, the ACCC will not object to future notifications for RPM.
Published date: 25 July 2018

The ACCC has published the Statement of Reasons in the following document.

From the complete details of the decision and related documentation.

It might not be ideal, however it passes the public interest tests under the legislation.

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And I will continue to state that the ACCC decision was provably wrong. I dissected the ACCC decision and it’s reasoning and responded to each and every point made. Not one point made by Tooltechnic, nor the ACCC benefits Australian consumers. They benefit Tooltechnic and it’s retail outlets solely. The ACCC is set up to work in the interests of consumers (It’s right there in the name), not greedy importers. I should also add that in the time that the ACCC allowed Tooltechnic to fix prices, Tooltechnic has acquired several other tool brands, which, I presume are now allowed to fix their prices as well.

Will we see this tool juggernaut grow ever larger, such that it commands a majority of tools in the Australian market, thus providing Australian consumers with no ability to compare prices between retailers?

Why is Tooltechnic allowed to sell their product in this way? When I recently purchased a new car, I was able to wrangle a 10% discount, through careful comparison. My car is VASTLY more complicated than any tool sold by Tooltechnic. The instruction manual for the car runs to around 70mm thick! ONE of the safety systems has it’s own handbook, around 10mm thick.

Tooltechnic has comprehensively fooled the ACCC.

It may have, but that for now respectfully is hearsay. The ACCC has said it looked to Tooltechnic’s competitors for input before reaching it’s recent decision. Perhaps they too saw no problem with the situation? It sounds as if it could be very difficult to change if the industry as a whole is not offering an alternate argument.

Are there recognised national industry trade related organisations who purchase the same tools? What did they say, or do they also take issue?

The range of products at the centre of the discussion are not your average daily home consumer purchase. They are pro trade tools.

Apologies if this seems awkward.
The way the ACCC functions is up to the Government of the day. If there is a serious issue with the decision by the ACCC, the Federal Government may be the only one able to resolve.

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No this is not the case. The ACCC authorisation is limited to Festool/Fein tools. If Tooltechnic has acquired other brands, then they would need to make a separate application for an exemption.

The ACCC decision was not about how complicated the product was or how thick the manual is, but was outlined in this post.

One also has the choice in relation to what tools they buy, if one should not be happy with the ACCC decision thinking it is not in their interests, one can purchase other brands of tools.

> BlockquoteNo this is not the case. The ACCC authorisation is limited to Festool/Fein tools. If Tooltechnic has acquired other brands, then they would need to make a separate application for an exemption.

I have yet to uncover details, but it is my recollection that Fein was acquired by Tooltechnic AFTER it’s initial request for RPM in 2014. There are many other, almost identical, products to the Fein available. More seriously though, Festool has now acquired the fabulous Sawstop technology. In the woodworking world, this is akin to the seatbelt. It saves limbs and lives. Unlike Volvo in 1959, who gave the three point seatbelt to the world without any license fees, Festool has already litigated against Bosch, who released a similar product. Tooltechnic will likely ensure that Sawstop technology will reach the smallest number of users, whilst maintaining the highest possible profit margins for Tooltechnic.

The ACCC decision was not about how complicated the product was or how thick the manual is, but was outlined in this post.

One also has the choice in relation to what tools they buy, if one should not be happy with the ACCC decision thinking it is not in their interests, one can purchase other brands of tools.

A major part of the ACCC decision DID relate to the alleged complexity of the product and it’s allegedly unique features.

As for your final comment, I refer you to the fact that RPM is illegal in Australia. Regardless of whether I or anyone else choose to buy from other manufacturers.

The facts are simple enough: The ACCC is a toothless tiger. Festool Europe was fined millions of Euros for doing what Tooltechnic is doing in Australia. I am stunned that people find RPM acceptable practice in 2021.

EDIT: I am still trying to work out the quote system. Unsuccessfully.