Miko runs a cosmetics store in Melbourne. A good part of Miko’s revenue comes from the popular MM foundation line. It has an extremely loyal customer base who often buy other products when they come into the shop to purchase their foundation. Earlier this year, a ‘Beep Q’ opened up in down the road selling cosmetics at low prices. Beep Q is a large national chain with a 30% share of the Australian cosmetics market. They have a history of opening shops near to existing small shops and driving them out of business through heavy discounting. Beep Q stock all of the MM foundation line and, for the last 3 months, have been selling these products for 35% below RRP and 10% below the price that Miko pays for them wholesale (including delivery). Since they opened, Miko has seen her sales of these products plummet and it is starting to make her worried about the survival of her business. Miko has also contacted Puppy, who distributes the MM products, to discuss her concerns about Beep Qs’ discounting. Puppy is concerned about the effect this discounting might have on the perceived value of MM products and promises to contact Beep Qs to ask them to sell MM products at the Recommended Retail Price. She also plans to say that Beep Qs will no longer be supplied with MM products if they continue to sell them below wholesale for extended periods of time. Advise Puppy as to whether either of these requests to Beep Qs would comply with her legal obligations under the Competition and Consumer Act 2010 (Cth).
Miko runs a cosmetics store in Melbourne. A good part of Miko’s revenue comes from the popular MM foundation line. It has an extremely loyal customer base who often buy other products when they come into the shop to purchase their foundation.
Earlier this year, a ‘Beep Q’ opened up in down the road selling cosmetics at low prices. Beep Q is a large national chain with a 30% share of the Australian cosmetics market. They have a history of opening shops near to existing small shops and driving them out of business through heavy discounting.
Beep Q stock all of the MM foundation line and, for the last 3 months, have been selling these products for 35% below RRP and 10% below the price that Miko pays for them wholesale (including delivery). Since they opened, Miko has seen her sales of these products plummet and it is starting to make her worried about the survival of her business.
Miko has also contacted Puppy, who distributes the MM products, to discuss her concerns about Beep Qs’ discounting. Puppy is concerned about the effect this discounting might have on the perceived value of MM products and promises to contact Beep Qs to ask them to sell MM products at the Recommended Retail Price. She also plans to say that Beep Qs will no longer be supplied with MM products if they continue to sell them below wholesale for extended periods of time.
Advise Puppy as to whether either of these requests to Beep Qs would comply with her legal obligations under the Competition and Consumer Act 2010 (Cth).
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