Commission acts against price fixing in online resales

Commissioner for Competition Margrethe Vestage, on Tuesday during the press conference. [European Commission]

The European Commission levied fines totalling €111 million against Asus, Philips, Pioneer and Denon & Marantz on Tuesday (24 July) for imposing fixed or minimum resale prices on online retailers.

The unprecedented case confirmed that the Commission is increasingly focusing on the online market, which is now worth €500 billion in Europe every year.

“More than half of Europeans now shop online”, said Commissioner for Competition, Margrethe Vestager.

“As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products,” Vestager added.

The Danish Commissioner also mentioned that her team is still looking into Nike, Sanrio and Universal Studios for restricting traders from selling their licensed merchandise cross-borders and online.

“We are making good progress but we are not there yet to take a decision,” Vestager said, referring to the pending case.

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The Commission has increased its surveillance on the online sector over the past few years. In May 2017, an e-commerce sector inquiry concluded that resale-price related restrictions were the most common in online sales.

The four manufacturers fined on Tuesday focused on online retailers that sold their products at low prices. If the sellers did not fix the prices requested by the device makers, they faced threats and sanctions including blocking of supplies.

The EU executive added that the implications went beyond the budget online websites, given that the biggest online retailers’ algorithms automatically adapt their prices partly based on competitors including these smaller online sellers.

Technology was also used by these manufacturers to track down those resellers who were breaking the minimum prices fixed.

Vestager said that the case represented a “serious” offence but it was “not as bad an illegal behavior as a cartel”.

Reduced fines

In addition, she welcomed the “cooperation” with the four companies involved, who fessed up to their misbehaviour at an early stage and provided evidence of “significant value” to conclude the case.

That benefited the enforcement of the competition rules, Vestager stressed.

In return, the Commission cut by 40% the penalty for three of the companies involved (Asus, Denon & Marantz, and Philips). Pioneer saw its fine cut by half.

Taiwan-based computer manufacturer Asus received the biggest penalty, which came to €63.5 million.

Between 2011 and 2014, the firm monitored in France and Germany the resale price of retailers for certain computer hardware and electronics products such as notebooks and displays. If traders sold its products at lower price, it requested an increase.

Denon & Marantz (Japan) used similar tactics in audio and video consumer products, including headphones and speakers, in Germany and the Netherlands between 2011 and 2015. Its fine was €7.7 million.

Between 2011 and 2013, Dutch firm Philips also conducted resale price maintenance in France in products including kitchen appliances, coffee machines, vacuum cleaners, home cinema and home video systems, electric toothbrushes, hair driers and trimmers. The penalty was €29.8 million.

Meanwhile, the Japanese company Pioneer not only controlled the prices of online resellers, but also limited their ability to sell cross border in other member states to maintain different resale prices in local markets.

It affected 12 countries (Germany, France, Italy, the United Kingdom, Spain, Portugal, Sweden, Finland, Denmark, Belgium, the Netherlands and Norway) between 2011 and 2013. It was fined with €10.1 million.

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