Fines for fixing online prices
It is well known the general prohibition to agree with your competitors what price you will charge to avoid having to compete (horizontal agreements/cartels).
It is also forbidden to agree with your resellers (vertical agreements) that the goods or services are going to be resold at a fixed or at a minimum price set by the supplier (the so-called resale price maintenance – RPM). No less, imposing maximum rebates/discount the reseller can offer or even the margin that the reseller can make is a typical way to indirectly fix the resale price.
The ban is applicable to more traditional brick-and-mortar markets but also to online markets. The sanctions imposed by competition authorities for fixing online prices either vertically or horizontally have grown steadily due to an increase in online commerce.
Here are some recent cases which might be relevant for your online business:
- The European Commission fined in 2018, with over Euro 111 million, four consumer electronics manufacturers: Asus, Denon & Marantz, Philips and Pioneer for imposing fixed or minimum resale prices on their online retailers.
The four manufacturers monitored and sanctioned the online retailers who did not apply their agreed prices. Moreover, some of the online retailers used a system which automatically change the resale price in accordance to their competitors.
- In May 2016, a catering equipment manufacturer that kept a minimum advertised pricing policy for online sales was fined by the UK competition authority. The authority upheld that the measure would constitute a de facto minimum pricing policy given the specific characteristics of the e-commerce environment.
- In August 2016, the same authority found that 2 online sellers of posters, featuring popular artists such as Justin Bieber and One Direction, and frames had participated in an illegal price-fixing cartel by agreeing that they would not undercut each other’s prices for products sold on Amazon’s UK website. The sellers also used automated re-pricing software.
Software providers should be aware that by creating online platforms which facilitate a cartel between their clients can also be judged to be in breach of the competition law.
In March 2018, the Romanian Competition Council carried out a sectorial investigation in E-commerce (the conclusions and recommendations can be found here: http://www.consiliulconcurentei.ro/uploads/docs/items/bucket13/id13201/raport_al_investigatiei_privind_sectorul_comertului_electronic.pdf.
So far, the national authority did nothing on fixing online prices (either horizontally or vertically) but the sector will be more and more under scrutiny both at the national and EU level.
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