[ad_1]
Yesterday, in four separate decisions, the European Commission fined the consumer electronics manufacturers Asus, Denon & Marantz, Philips and Pioneer € 111 million for imposing fixed or minimum resale to their online retailers. (1965)
The subject of vertical restraints is certainly not new, quite the opposite. However, yesterday's decisions are very relevant for companies engaged in e-commerce, as they are the first to take stock of the EC's findings in the recent e-commerce sector inquiry, particularly as regards concerns pricing and monitoring algorithms.
Background
The announcement of yesterday follows the final report of the EC's e-commerce sector inquiry, which the EC published in May 2017. The report signals a trend of manufacturers seeking control of their online distribution networks, resulting in a number of antitrust issues in the online space, including:
- widespread use price restrictions (resale price, or RPM), which affects 42% of the survey. According to the EC, the online space is subject to such restrictions, due to the increase in price transparency online as well as the use of pricing software allowing automatic price adjustment based on observed prices of competitors. restrictions to sell, also known as geoblocking. According to the EC's final report, such restrictions affect 11% of respondents in the consumer goods section of the survey. They may be covered by Article 101 TFEU when adopted in the context of an agreement between supplier and retailer – and not unilaterally by the latter.
As a result of the investigation, the EC immediately announced the launch of several suspected anti-competitive vertical suspicion investigations in e-commerce in three areas: consumer electronics (completed yesterday), gambling video and hotels (both of which are in progress).
First preview of the RPM in the digital age
While the non-confidential version of the decisions on the consumer electronics will not be published before a few weeks, or even several months , the EC press release already provides useful practical advice on the RPM in the online space. themselves have taken a fairly traditional form. Online retailers who do not follow the prices imposed by manufacturers would face threats or sanctions, eg. blocking supplies. In addition, Pioneer supported its RPM policy with a limitation of cross-border sales in order to maintain different resale prices in different Member States.
More importantly, the effect of these RPM practices has been magnified and maximized through the use of online tools:
- Sophisticated monitoring tools have allowed manufacturers to track deviations from the imposed price and to intervene quickly in case of lower prices.
- Most retailers use pricing algorithms that automatically adjust retail prices. not only the dealers of the offenders, but the whole of the industry, which resulted in higher prices for consumers.
As a result of the above findings, and despite the cooperation of the violators, the EC imposed significant fines: € million to Asus, € 7.7 million to Denon & Maratz, 29, 8 million euros to Philips and 10.1 million euros to Pioneer. It is interesting to note that these fines include discounts for "providing significant value-added evidence and expressly acknowledging the facts and the offense" ranging from 40 to 50%. Although the press release does not mention them, this language echoes the leniency and settlement procedures – which are strictly limited to cartels. To our knowledge, this is the first time that the EC implicitly use these rules in the context of vertical restraints.
More to come
Over the past decade, the EC has largely left the application of the RPM in the hands of national competition authorities. These days are now over: further decisions are coming, and the EC sends a clear signal that the risk of fine is more serious than ever.
For businesses operating online, yesterday's decisions are a useful reminder when engaging with their online distributors. In this respect, although the use of pricing algorithms and monitoring software is legal under EU competition law, they should never become instruments supporting an RPM policy – a message that could be sent to your sales team.
[ad_2]
Source link
