Online Price-fixing and EU Commission Fines

The EU Commission has fined four consumer electronics manufacturers, including Asus, for fixing online resale prices

 

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 consumers.

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.

Published: 2018-07-24T17:00:00

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