E-commerce and ‘best price’: the outside scrutiny factor

Unlike numerous other European Member States, the Netherlands Authority for Consumers & Markets (“ACM’’) has stayed aloof from investigations into vertical restraints. In the past years it has not imposed any fines in either online or offline cases involving resale price maintenance. It has also not taken any concrete steps against best price clauses adopted by portals such as Booking.com or Expedia.nl. In other Member States, such as Germany and the United Kingdom, these type of restraints have in fact been scrutinized. The European Commission is now also stepping in.

The ACM’s approach differs from the developments in other European countries. In the past years, for instance, the Danish, German, French, Irish, Austrian, Polish, British and Swiss competition authorities have repeatedly demonstrated that they take action against restraints in vertical relations. The European Commission also has the subject on its radar. In December 2013 it carried out dawn raids at several companies involved in the production, distribution and sale of electronic products for consumers and small domestic appliances for the purpose of investigating possible restrictions in online sales.

Remarkably, the competition authorities in various countries also (initially) pursued this particular issue differently. The Bundeskartellamt, for instance, organized a congress on ‘’Vertical Restraints in the Internet Economy’’ in October 2013, which led to an interesting paper. Earlier the OFT in the United Kingdom had published the paper Can ‘Fair’ Prices Be Unfair? A Review of Price Relationship Agreements. Additionally, the OFT highlighted the ‘Most Favoured Nation clauses’ and ‘Resale Price Maintenance’ in the paper Retail Price MFNs: ‘are they RPM at its worst’? In September 2014 Philip Marsden of the Competition and Markets Authority (CMA) elaborated in a speech on the desired approach of the CMA with regard to the enforcement of competition law in online markets. He added that the CMA gave the highest priority to anti-competitive conduct in online markets. Similarly the Austrian competition authority published a report on resale price maintenance in July 2014.

As we observed in this blog, it was therefore only a matter of time until the topic would also appear on ACM’s agenda. In November 2014 Chris Fonteijn, chairman of ACM, acknowledged in his speech that ACM had given little priority to vertical restraints. At the same time he noted that the emergence of e-commerce had not changed this. ACM does, however, intend to prioritize vertical restraints that present a high risk for consumers. He argued that that would particularly be the case (i) if vertical restrictions are used as an instrument to facilitate collusion between producers; or (ii) if ‘inter-brand competition’ is already restrained and vertical agreements are used as a tool to exercise market power. Chris Fonteijn added that ACM aims to publish a Position Paper on the issue in early 2015.

Apparently ACM intends to steer clear of the strict approach adopted by other competition authorities, in particular by the Bundeskartellamt, with regard to restraints in vertical agreements. ACM does not stand alone here. The Swedish competition authority decided in December 2014 not to take action against a resale price maintenance case, reasoning that the case was unlikely to lead to significant harm to consumers.

These developments give rise to the following observations for 2015:

  1. The outside scrutiny factor. Despite policy changes and possible investigations into anticompetitive behaviour in e-commerce or best price clauses by ACM, enforcement by a competition authority in one country (e.g. Germany) can have consequences for the (e-commerce) policy that a company employs in the Netherlands. Nespresso, for instance, albeit in a different context (a complaint about abuse of market power submitted by DE Master Blenders in France), adjusted their policy in several Member States, including the Netherlands, after giving undertakings to the French competition authority. This demonstrates how enforcement by a competition authority in one Member State can lead to changes to the commercial policy in other Member States.
  2. As apparent, for example, from the case before the Preliminary Relief Judge between Tronios/Detronics and from the case between Voorne Koi/Oase, companies in the Netherlands do not shy away from legal proceedings when it comes to restraints in vertical agreements. That process can also be affected by developments in other European countries. Partly as a result of earlier enforcement by the competition authorities, case law has now emerged in other Member States that may accelerate this process. According to the President of the Bundeskartellamt, the decision of the Düsseldorf Higher Regional Court in which it rejected an appeal regarding best price clauses against the enforcement by the Bundeskartellamt, can serve as a precedent for other European judges: "The decision of the Düsseldorf Higher Regional Court is the first of a national court which can serve as an orientation for the proceedings currently conducted by our European colleagues."

In sum, it is advisable for producers and wholesalers, particularly if they operate in several Member States, to check whether the agreements with their distributors contain potentially anti-competitive clauses. Clear internal guidelines and frequent practical training of the commercial department(s) can prevent high (personal) fines.

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