INSUBCONTINENT EXCLUSIVE:
The European Union antitrust authorities have issued a series of penalties, fining consumer electronics companies Asus, Denon Marantz,
Philips and Pioneer more than€110 million (~$130M) in four separate decisions for imposing fixed or minimum resale prices on their online
retailers in breach of EU competition rules.
It says the four companiesengaged in so called &fixed or minimum resale price maintenance
(RPM)& by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products —
such as kitchen appliances, notebooks and hi-fi products.
Asus has been hit with the largest fine (€63.5M), followed by Philips (€29.8M)
The other two fines were €10.1M forPioneer, and€7.7M for Denon Marantz.
The Commission found the manufacturers put pressure on
ecommerce outlets who offered their products at low prices, writing: &If those retailers did not follow the prices requested by
manufacturers, they faced threats or sanctions such as blocking of supplies
Many, including the biggest online retailers, use pricing algorithms which automatically adapt retail prices to those of competitors
In this way, the pricing restrictions imposed on low pricing online retailers typically had a broader impact on overall online prices for
the respective consumer electronics products.&
It also notes that use of &sophisticated monitoring tools& by the manufacturers allowed them
to &effectively track resale price setting in the distribution network and to intervene swiftly in case of price decreases&.
&The price
interventions limited effective price competition between retailers and led to higher prices with an immediate effect on consumers,& it
added.
In particular,Asus, was found to have monitored the resale price of retailers for certain computer hardware and electronics products
such as notebooks and displays — and to have done so in two EU Member States (Germany and France), between 2011 and 2014.
While Denon
Marantz was found to have engaged in &resale price maintenance& with respect to audio and video consumer products such as headphones and
speakers of the brands Denon, Marantz and Boston Acoustics in Germany and the Netherlands between 2011 and 2015.
Philips was found to have
done the samein France between the end of 2011 and 2013 — but for a range of consumer electronics products, including kitchen appliances,
coffee machines, vacuum cleaners, home cinema and home video systems, electric toothbrushes, hair driers and trimmers.
In Pioneer case,
theresale price maintenance covered products including home theatre devices, iPod speakers, speaker sets and hi-fi products.
The Commission
said the company also limited the ability of its retailers to sell-cross border to EU consumers in other Member States in order to sustain
different resale prices in different Member States, for example by blocking orders of retailers who sold cross-border
Its conduct lasted from the beginning of 2011 to the end of 2013 and concerned 12 countries (Germany, France, Italy, the United Kingdom,
Spain, Portugal, Sweden, Finland, Denmark, Belgium, the Netherlands and Norway).
In all four cases, the Commission said the level of fines
were reduced — 50% in the case of Pioneer; and 40% for each of the others — due to the companies& co-operation with its investigations,
specifying that they had providedevidence with &significant added value& and had &expressly acknowledg[ed] the facts and the infringements
of EU antitrust rules&.
Commenting in a statement, commissioner Margrethe Vestager, who heads up the bloc competition policy, said:&The
online commerce market is growing rapidly and is now worth over 500 billion euros in Europe every year
More than half of Europeans now shop online
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
This is illegal under EU antitrust rules
Our decisions today show that EU competition rules serve to protect consumers where companies stand in the way of more price competition and
better choice.&
We&ve reached out to all the companies for comment.
The fines follow the Commission ecommerce sector inquiry, which reported
inMay 2017, and showed that resale-price related restrictions are by far the most widespread restrictions of competition in ecommerce
markets, making competition enforcement in this area a priority— as part of the EC wider Digital Single Market strategy.
The Commission
further notes that the sector inquiry shed light on the increased use of automatic software applied by retailers for price monitoring and
price setting.
Separate investigations were launched inFebruary 2017andJune 2017to assess if certain online sales practices are preventing,
in breach of EU antitrust rules, consumers from enjoying cross-border choice and from being able to buy products and services online at
The Commission adds that those investigations are ongoing.
Commenting on today EC decision, a spokesman for Philips told us: &Since the
start of the EC investigation in late 2013, which Philipsreported in its Annual Reports,the company has fully cooperated with the EC
Philips initiated an internal investigation and addressed the matter in 2014.&
&It is good that we can now leave this case behind us, and
focus on the positive impact that our products and solutions can have on people,& he added
&Let me please stress that Philips attaches prime importance to full compliance with all applicable laws, rules and regulations
Being a responsible company, everyone in Philips is expected to always act with integrity
Philips rigorously enforces compliance of its General Business Principles throughout the company
Philips has a zero tolerance policy towards non-compliance in relation to breaches of its General Business Principles.&
Anticipating the
decision of the EC, he said the company had already recognized a€30M provision in its Q2 2018.
