The Netherlands Authority for Consumers and Markets (ACM) has fined electronics group LG €8 million for influencing retailers’ selling prices for televisions, a violation of competition law. A supplier is allowed to give recommended prices to retailers, but this may not go beyond mere advice: retailers must be free to set their own selling prices. Any restriction of this freedom is deemed a violation of the cartel prohibition set out in Article 6 of the Competition Act and Article 101 TFEU.
Vertical price maintenance is high on the regulators’ radar. ACM has previously launched a campaign to warn retailers about vertical price-fixing. It has also issued warnings to suppliers of baby and children’s products, smart electronic sports devices, food supplements, mobile television receivers and home furnishing products. Suppliers have also been forced to set up compliance programmes and to send letters to their customers stating that retailers are free to set their own prices.
But it does not end with warnings. LG has been fined for entering into prohibited agreements with seven major online retailers on the prices of LG televisions. LG gave price recommendations to retailers selling their televisions and requested them to charge those prices. The retailers complied with those requests. LG monitored the prices and called retailers to account if they charged prices below the recommended retail price. LG also requested retailers not to advertise certain offers on price comparison sites, not to automatically follow prices of other retailers, and not to display store discounts online.
This is the second time ACM has fined such practices. Samsung was previously fined for similar behaviour. ACM also accused Samsung of having actively influenced retailers’ (online) consumer prices of televisions. It rejected Samsung’s objection to this fine. Samsung has filed an appeal and LG is likely to do the same.
In both proceedings, the court is likely to address the recent Super Bock judgment, in which the European Court of Justice clarified that vertical price-fixing agreements require (explicit or tacit) consent of distributors to observe the imposed resale prices. This requirement appears to have been met in the Samsung and LG cases, because retailers adjusted their prices in response to the ‘recommended retail prices’.
It will also be interesting to see whether the court finds that ACM sufficiently investigated and demonstrated that this behaviour restricted competition. It may follow from European case law that, in principle, a restriction of competition between distributors of the same brand (intrabrand competition) is harmful only if actual competition between different brands (interbrand competition) is weakened. This is not evident in either the Samsung or to LG case. To be continued!
This blog was also published in the Snelrecht section of the trade journal Mr. The article can be read here.
Information on a dawn raids by ACM and the European Commission can be found at invalacm.nl
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