A supplier that obligates its distributors to charge fixed or minimum prices runs the risk of breaching the cartel prohibition. Such an obligation is also known as resale price maintenance (RPM) and is subject to fines imposed by competition authorities. Until recently, the European Commission gave little priority to such fines. That appears to be changing. The Commission recently imposed fines totalling over €110 million on four consumer electronics manufacturers.
According to the Commission (IP/18/4 601), Asus, Denon & Marantz, Philips and Pioneer imposed fixed or minimum resale prices on their online retailers. They did so to prevent them from selling the products online at a too low price. Sophisticated monitoring tools allowed the manufacturers to check whether the retailers complied with the imposed prices. If they failed to do so, they faced sanctions, such as the blocking of supplies. This had an impact on the entire retail market because many (large) online retailers use algorithms to adjust their prices to those of competitors. In the Commission’s opinion, consumers have been harmed because the price-fixing led to higher prices.
Enforcement of the ban on resale price maintenance was the domain of national competition authorities in the past years. The Bundeskartellamt in Germany and the Competition and Market Authority in the United Kingdom in particular are very active in this field (see our earlier blog). The Netherlands Authority for Consumers and Markets (ACM) follows a (more) reticent policy; in its opinion resale price maintenance is not by definition harmful to consumers. Consumers may benefit from vertical agreements if they lead to better service or new market players. ACM’s supervision is aimed at addressing vertical agreements that, on balance, are harmful to consumer welfare. Since the Commission appears to have designated (online) vertical price-fixing as a policy objective, the question is whether ACM will also more actively go in search of (online) vertical agreements that are harmful to consumers. The fines imposed by the Commission in any event demonstrate that suppliers in the Netherlands must also be on their guard.
The article can be found here.
Detailed information on dawn raids by ACM and the Commission can be found at www.invalacm.nl.