Online Price-fixing and EU Commission Fines

July 23, 2018


The European Commission has published four separate
decisions, which result in fines for consumer electronics manufacturers Asus,
Denon & Marantz, Philips and Pioneer. The fines relate to their activity in
imposing fixed or minimum resale prices on their online retailers in breach of
EU competition rules.

The fines totalling over €111 million were in all four cases
reduced due to the companies’ cooperation with the Commission. 

Commissioner Margrethe Vestager, in charge of 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.’

Asus, Denon & Marantz, Philips and Pioneer engaged
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.

The four manufacturers intervened particularly with online
retailers, who offered their products at low prices. 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.

Moreover, the use of sophisticated monitoring tools allowed
the manufacturers 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

In particular, Asus, headquartered in Taiwan, monitored the
resale price of retailers for certain computer hardware and electronics
products such as notebooks and displays. The conduct of Asus related to two
Member States (Germany and France) and took place between 2011 and 2014. Asus
intervened with retailers selling those products below the resale prices
recommended by Asus and requested price increases.

Denon & Marantz, headquartered in Japan, 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, headquartered in the Netherlands, engaged in
resale price maintenance in France between the end of 2011 and 2013 with
respect to a range of consumer electronics products such as kitchen appliances,
coffee machines, vacuum cleaners, home cinema and home video systems, electric
toothbrushes, hair driers and trimmers.

In parallel to resale price maintenance with respect to
products such as home theatre products, iPod speakers, speaker sets and hi-fi
products, Pioneer, headquartered in Japan, also limited the
ability of its retailers to sell-cross border to 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. Pioneer’s
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).

All four companies cooperated with the Commission by
providing evidence with significant added value and by expressly acknowledging
the facts and the infringements of EU antitrust rules.

The Commission therefore granted reductions to the fines
depending on the extent of this cooperation ranging from 40 % (for Asus, Denon
& Marantz and Philips) to 50 % (for Pioneer). Asus received the largest fine
– over 63 million euros.