High fine for resale price maintenance: warning for suppliers

The Netherlands Authority for Consumers and Markets (ACM) has imposed a high fine of €39 million on electronics group Samsung for exerting undue influence on the retail prices of televisions, in breach of competition law. A supplier may state recommended retail prices to retailers, but they may not be more than a recommendation: retailers must be free to set their own retail prices. Any restriction of that freedom is deemed to be in breach of the ban on cartels set out in Article 6 of the Competition Act and Article 101 of the TFEU. This is the first time ACM has fined a supplier for acting in this manner.

According to ACM, Samsung made sure, under the pretext of “price recommendations”, that retailers increased their prices to the level desired by Samsung. The retailers followed Samsung’s recommendations because Samsung also consistently called other retailers to account if the prices they charged were too low. Samsung knew that it could not force retailers to increase their prices and therefore used the term “recommendations”, but in reality those recommendations were neither individual not voluntary. In ACM’s opinion, Samsung’s practices disrupted competition at the retail level and resulted in higher prices for consumers.

The decision did not come out of the blue. ACM announced in 2018 that it had carried out dawn raids. ACM also made it known at that time that it intended to give greater priority to vertical restraints in future. It furthermore replaced its earlier supervision strategy with a stricter policy.

ACM recently closed an investigation into possible mandatory minimum prices for retailers in the home furnishing sector, due to a lack of evidence. But ACM made use of the opportunity to emphasise the rules for suppliers and distributors. On the basis of six points, ACM reiterated that distributors must determine their selling price and any discount independently. Suppliers may do no more than advise in that area. They may not exert pressure in any way, for instance by threatening to stop supplying distributors if their advice is not followed. A supplier may also not provide information to a distributor on the sales prices charged by other distributors. The reverse is also prohibited: distributors may not provide information on the prices of other suppliers.

Abroad, resale price maintenance is also high on the radar of competition authorities. The French authority, for instance, recently imposed a €125 million fine on eyewear manufacturers. In Germany, musical instrument manufacturers were fined €21 million. The European Commission is also continuing its strict action against resale price maintenance. The proposals for revision of the Vertical Block Exemption Regulation and Vertical Guidelines leave no doubt that resale price maintenance remains prohibited. ACM has announced the launch of a campaign to warn retailers about vertical price-fixing agreements and to explain the rules. To be continued!

This blog was also published in the Snelrecht column of the Mr. journal. The article can be found here.

Information on dawn raids by ACM and the European Commission can be found at invalacm.nl

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