The German Competition Authority imposed again fines for resale price maintenance
The German Competition Authority (Bundeskartellamt, BKartA) continues to proceed strictly against the enforcement of resale price maintenance (RPM). On the 12th of January 2017 fines of a total amount of EUR 4.43 million have been imposed against the five furniture makers aeris GmbH, hülsta-werke Hüls GmbH & Co. KG, Kettler GmbH, Rolf Benz AG & Co. KG und Zebra Nord GmbH as well as on four responsible managers.
Reason for the procedure
The proceedings were initiated due to complaints of retailers. For this reason the BKartA searched single manufacturers (dawn raids).
The BKartA found that the manufacturers had applied inadmissible pressure on lower-price retailers, especially by threatening to or in some cases actually refuse to supply. Some of the competing retailers had also helped to monitor compliance with the set minimum sales prices by reporting to the manufacturers the deviating retailers and asking them to ensure that the price level was maintained.
Because of the cooperation of all of the involved companies, the BKartA was able to conclude the proceedings by way of settlement. The imposition of fines on the retailers involved has been waived for discretionary reasons. For some of the companies the limited financial performance led to a reduction in fine.
Practical tip Dr. Dethof
In principle retailers have to be free to set their own retail prices. The manufacturers are not allowed to give any instructions. Non-binding recommended resale prices are harmless from an antitrust point of view but only if they are not enforced by applying pressure on the retailer. The BKartA announced that there will be a guideline that will be published as a draft within the next weeks. Fieldfisher created an overview of the most important aspects regarding dealing with resellers, which can be requested by everyone interested free of charge from firstname.lastname@example.org.
Overview of the previous decision of the BKartA
The BKartA proceeded in the last years quite often against vertical price fixing. The following is an overview of selected decisions:
Price fixing in the food trade (December 2016)
The last fine of EUR 18.3 million was imposed on several food merchants, among others Edeka, in the so-called "vertical case" (December 2016). Between 2006 and 2009, the companies have been involved in agreements on the pricing of beer. Already in May 2016 eleven companies involved in the food trade have been fined because of vertical agreements amounting EUR 112 million. The vertical case included products from the product groups confectionery, coffee, animal food, beer and personal care products. In total, 38 individual fines were imposed on 27 companies with a total volume of EUR 260.5 million. The procedure began already in 2010 with investigations.
Price fixing of LEGO highlights (January 2016)
EUR 130,000 were imposed on LEGO GmbH in January 2016. LEGO had urged the retailers to raise the end-customer prices of the so-called "highlight articles". LEGO threatened to terminate the supply and based the amount of price reductions on the compliance with the recommendations. The retailers and the articles were recorded in lists for monitoring.
Vertical price fixing in the mattress case (October 2015)
The BKartA imposed fines against the Recticel Schlafkomfort GmbH and against Metzeler Schaum GmbH because of prohibited price fixing of their retailers. Recticel had to pay EUR 8.2 million (August 2014) and Metzeler EUR 3.38 million (February 2015). The proceedings were concluded in October 2015with the imposition of a fine of EUR 15.5 million against Tempur Deutschland GmbH.
Retail price maintenance and "Street Prices" (Mai 2015)
The United Navigation GmbH was fined in May 2015 with an amount of EUR 300,000. Over a period of five years the company had agreed with its retailers (especially online retailers) that they will not undercut the recommended retail prices for portable navigation devices. If the price level was not complied with, the retailers were requested to enforce a "street price", which was stipulated in addition to the RRP, and threatened with the termination of supply or legal steps.
Vertical price fixing at the cosmetics sector (July 2013)
The BKartA also imposed a fine of EUR 6.5 million against WALA Heilmittel GmbH in July 2013. According to the allegation of the BKartA the company had applied pressure on its retailers and had terminated the supply if the prescribed non-binding recommended retail prices were not complied.
Enforcement of recommended resale prices
TTS Tooltechnik had to pay a fine of EUR 8,3 million in August 2012. Due to the findings of the BKartA TTS Tooltechnik demanded in conversations with the retailers to strict compliance with its prices and threatened to worsen the supply conditions or terminate supply.
Garmin, according to the allegation of the BKartA, had offered special rebates to resellers who distributed Garmin navigation devices at particularly low prices over the Internet, in order not to undercut the recommended resale prices. The BKartA therefore imposed a fine of EUR 2.5 million in June 2010.
CIBA, a manufacturer of contact lenses, maintained a system that enabled it to monitor reseller's internet price. In case of deviating prices, the relevant resellers were contacted and asked to raise their prices. The fine was EUR 11.5 million.
Agreements on resale prices
Microsoft had to pay a fine of EUR 9 million in April 2009. According to the findings of the BKartA Microsoft had fixed the resale price of a software package for certain resellers.
In 2009 leading manufacturers/suppliers of spectacle lenses provided opticians with price recommendations which included the opticians' crafting services. Most opticians observed these prices, effectively turning them into minimum prices. Due to pressure exerted by the BKartA, the manufacturers have now refrained from issuing RRP lists. Due to the agreement, the BKartA did not impose any fines.
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