Fender has been fined nearly $6 million USD in the UK after admitting to price-fixing. The move breaks competition laws and prevents retailers from discounting instruments.
Fender engaged in price-fixing between 2013 and 2018 in Britain, according to the UK’s Competition and Markets Authority (CMA). The price-fixing scheme led to the largest fine yet imposed on a company for engaging in the practice.
“It is absolutely essential that companies do not prevent people from being able to shop around to buy their products at the best possible price,” a CMA executive stated.
Fender cooperated with the CMA’s investigation and made changes to its requirements for retailers. “As a result of the investigation, we have taken additional steps to enhance our compliance procedures,” a Fender spokesperson said. “Our new EMEA executive team will continue to rigorously monitor the business’ adherence to antitrust and competition laws.”
Fender may have been shooting itself in the foot with this one. The rate of new guitar players is on the decline – and expensive guitars may be part of the reason. Fender CEO Andy Mooney admitted that 45% of new guitars sold go to new players.
“[There are] a million new entrants in English speaking countries alone every year; only 100,000 of them commit,” he said in an interview. Fender wants to reduce abandonment by 10% to keep new players as lifetime customers. Somehow, Fender thought price-fixing was the answer.
But these kinds of price-fixing schemes are counter-intuitive for instrument companies. When a new player hears that Fender is artificially inflating the cost of its guitars, suddenly, other brands come into the picture.
Fender Musical Instrument’s line-up extends beyond just its iconic Fender brand. It also includes Squier, Gretsch, Jackson, Charvel, and EVH. Price fixing across so many brands drives customers away and lowers long-term retention and repeat buying. If Fender’s goal is new player retention, then it should do more to make entry into the hobby as affordable as possible.