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LONDON (Reuters) - Britain's three biggest department stores colluded with a lingerie manufacturer to fix the price of a market-leading sports bra, a competition watchdog alleged on Friday, raising the possibility of punitive fines.
Britain's Office of Fair Trading (OFT) alleged that supplier DB Apparel UK Limited entered into nine nationwide anti-competitive agreements with employee-owned John Lewis, Britain's biggest department store group, number two Debenhams and number three House of Fraser, between 2008 and 2011.
The OFT has been taking a tougher line against retailers recently to ensure consumers can trust their prices and communications. It took action against Britain's supermarkets on misleading prices last year, and against furniture and carpet retailers last month.
It has the power to fine offenders up to 10 per cent of their annual worldwide turnover.
DB Apparel, Debenhams and House of Fraser rejected the OFT's allegations, while John Lewis said it "strives to operate within the law and comply with regulations."
The OFT alleges the four companies infringed competition law by entering into resale price maintenance agreements, setting fixed or minimum resale prices for sports bras in the popular Shock Absorber range.
"These alleged agreements had the aim of increasing the retail prices of DBA's Shock Absorber brand of sports bras in each of the three department stores," the OFT said.
It said that during the three years in question the Shock Absorber range had a UK market share of about 15 percent.
"The OFT takes allegations of price-fixing seriously. Resale price maintenance limits competition between retailers and can lead to consumers paying higher prices," said Ann Pope, OFT Senior Director of Services.
She said no assumption should be made at this stage that there had been an infringement of competition law.
"We will carefully consider the parties' representations to the (OFT's) Statement of Objections before deciding whether competition law has in fact been infringed."
DB Apparel refuted the OFT's allegations. "We have been transparent with UK authorities since the beginning of this process and will continue to defend ourselves vigorously in this investigation," it said.
Debenhams said it also disputed the OFT's provisional findings. "The matter is being dealt with by external lawyers," said a spokesman. Its shares fell as much as 1.6 percent on Friday.
A spokeswoman for House of Fraser said: "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."
Reporting by James Davey; Editing by Christine Murray and Mark Potter