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Competition Law

Analysis - debate - current awareness

02 DEC 2013

For how much will this retail?

By John Cassels

When asked of a retailer, this question is innocuous (unless, of course, it is being asked by a competing retailer).  When asked of a supplier, it can point to resale price maintenance. 

The EU Commission's approach to RPM is that it is presumed to restrict competition, but, may also lead to efficiencies which can be exempt from prohibition.  However, other than short term promotions where a supplier is launching a new product in the EU, it is difficult to foresee a set of circumstances in which an agreement that included RPM (as opposed to recommended resale prices or maximum resale prices) would be found to be anything other than a serious infringement of the EU's competition rules.

RPM has also been the focus of a number of recent national investigations and decisions:

  • In Portugal, the Competition, Regulation and Supervision Court's first judgment on competition matters, was to uphold fines imposed on a dairy producer, Lactogal, for resale price maintenance. The Portuguese Competition Authority had imposed a fine of €340,000 on Lactogal in connection with the imposition of minimum resale prices and fixing the margins of distributors in the HORECA channel (hotels, restaurants and cafés) between 2003 and 2006.
  • In France, the Paris Court of Appeals confirmed last month a landmark decision of the French Competition Authority fining three leading manufacturers of pet food €35.3 million. They were found to have imposed resale prices and territorial restrictions on their distributors in France between 2004 and 2008. Two of the manufacturers were found to have negotiated the resale prices of the pet food products with specialist retailers (pet shops, farmers, and vets), even though these retailers purchased their products from wholesalers.
  • In Italy, an investigation has been launched into whether a supplier of sports nutrition products, Enervit, entered into agreements with its network of wholesalers and retailers that were designed to set minimum prices (including setting a maximum discount level for online retailers) and which prohibited them from selling Italian language products outside Italy's borders.
  • In the UK, there are ongoing investigations into allegedly problematic resale pricing arrangements in the supply of sports bras, in hotel online booking and in the supply of mobility scooters. In the mobility scooters investigation, the OFT has provisionally concluded that the parties entered into agreements that prevented UK-wide online retailers from advertising online prices below the recommended retail price.

As online retailing (and discount online retailing) becomes of ever greater importance, the temptation to try to maintain margins and protect preferred resellers only grows stronger.

If you would like to discuss these issues, please do not hesitate to contact John Cassels at john.cassels@ffw.com     

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