European Union: Competition Newsletter October/November 2018

Last Updated: 15 November 2018
Article by Emmanuelle van den Broucke and Alexia Delaunay

The European Commission fined four consumer electronics manufacturers for fixing online resale prices

On July 24, 2016, the European Commission imposed fines totaling €111 million on Asus, Denon & Marantz, Philips and Pioneer for imposing fixed or minimum resale prices on their retailers. These four decisions were adopted following an investigation with which the manufacturers decided to cooperate, enabling them to have their fines reduced by up to 50 percent.

In 2013, the Commission first carried out random inspections in Pioneer and Philips' premises. Two years later, in 2015, the premises of these four manufacturers' retailers were visited. Following these inspections, the Commission offered the manufacturers the possibility to cooperate with the inspection by providing information on their conduct, which they agreed to do. The settlement agreements provided that they had to undertake to admit clearly and unequivocally their liability for their involvement in the offense.

In these cases, the procedure adopted by the European Commission is very interesting. On the one hand, the Commission used criteria taken from the 2006 communication on the immunity from fines, whereas this communication on leniency procedures is a priori not applicable to horizontal arrangements. On the other hand, it used criteria from the 2008 communication on settlement procedures. This enabled the companies to benefit from substantial reductions.

Essentially, the Commission criticized these manufacturers for using various price monitoring tools in order to determine which retailers practiced the lowest prices to contact them and ask them to increase their prices. As most distributors were present online, it was easy for the manufacturers to track their prices and react rapidly if they deemed them too low. Moreover, the manufacturers were informed of the low price practices of the online retailers through complaints from other retailers.

The purpose of the scheme set up by the manufacturers was to avoid or slow down the reduction of their products' prices on all the online distribution network. The manufacturers used various means of pressure on the online stores to ensure compliance with their instructions, such as threats to cut funding or block supplies.

In addition, the Commission noted that the determination of their resale prices by the distributors was increasingly automated through the use of algorithms which adapt prices to those of competitors. Accordingly, the constraint imposed by the manufacturers, when forcing their resellers to increase their prices, went well beyond the sole retailers contacted and had a domino effect on the entire market.

Therefore, the Commission concluded that these behaviors constituted unlawful resale price maintenance practices and online sales discrimination. These practices are all the more reprehensible in that they had an immediate impact on consumers. Indeed, the sanctioned practices led to increased prices for consumer electronics, products which can be found in every household.

Reminding the suppliers that they cannot control their retailers' prices, even if some traditional retailers suffer from intense competition from pure players, the Commission stressed the opportunity to cooperate with the authorities in case of an investigation, including in the context of vertical arrangements.

The French Competition Authority sanctions Sanicorse for excessive prices

On September 20, 2018, the French Competition Authority imposed a €199,000 fine on Sanicorse for having abused its dominant position in the sector of infectious medical waste disposal in Corsica by practicing excessive prices vis-à-vis healthcare establishments.

Healthcare establishments are legally obliged to treat the management of their infectious medical waste (DASRI) within tight deadlines and conditions or entrust this task to a service provider. In Corsica, Sanicorse holds a de facto monopoly in this sector, since it is the only existing service provider and has long treated all the island's hospital waste.

In the context of this investigation which led to the matter being brought before the French Competition Authority, the BIEC (the Provence-Alpes-Côte d'Azur, Languedoc-Roussillon, Corsica interregional competition investigation squad, answerable to the Minister of Economy) found that Sanicorse had taken advantage of its monopolistic situation to increase its rates suddenly and without objective justification vis-à-vis the healthcare establishments. These rate increases reached nearly 200 percent in some cases. To impose these significant increases, Sanicorse threatened the healthcare establishments with terminating the existing agreements or not participating in invitations to tender. As the only company active in Corsica, the healthcare establishments were captive and had no other choice than to accept these increases. Moreover, the French Competition Authority considered that the healthcare establishments had been dissuaded from developing alternative solutions for fear of Sanicorse's retaliatory measures.

Consequently, the company was found to have committed an abuse of exploitation between 2011 and 2015 by increasing, in a lasting, significant and unjustified manner, the rates applied to Corsican hospitals and clinics for the disposal of their waste. The impact of these practices is all the more prejudicial that some of the healthcare establishments concerned are in a difficult financial situation, and this extra cost could have been used to improve the quality of the public and private health service.

This sanction was decided after Sanicorse refused the Minister of Economy's settlement proposal which amounted to €75,000 (i.e. more than 2.5 times less than the fine finally imposed by the French Competition Authority) pursuant to the settlement procedure provided for local anticompetitive practices (the amount of the settlement could not exceed €150,000 or five percent of the last turnover if lower). The refusal motivated the Minister of Economy to bring the matter before the French Competition Authority. Yet another example illustrating the fact that it is often perilous to refuse a settlement...

Law on agriculture and food: price and contractual relations regulation

The bill on agriculture and food was adopted on October 2 by the National Assembly. The purpose of this law is to make the purchase prices of agricultural products more lucrative for farmers and to improve commercial and contractual relationships between producers, processors and distributors. Several provisions of this bill will have a direct impact on the distributors' margins and organization.

Firstly, the threshold of resale at a loss is increased to 10 percent. Currently, when a store purchases a product from a supplier for €1 (after discounts), it must resell it at no less than €1 on the shelf. Once the law enters into force, this same product may not be resold at less than €1.10. Furthermore, promotions offered to consumers will be capped at 34 percent of the product's final value.

Relations between producers and purchasers (industrials or distributors) will take the form of an agreement proposed by the producer including a certain number of mandatory mentions. Prices will be determined based on the costs borne by the farmer, which leads to the creation of price indicators. These indicators will be fixed by interprofessional organizations and must be taken into consideration in the renegotiation clauses.

The law has been brought before the French Constitutional Council which may censor all or part of its provisions.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions