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European Commission fines electronics manufacturers for e-commerce price manipulation

January 2019 - Corporate & Commercial. Legal Developments by GRP Rainer LLP.

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The European Commission has imposed fines in separate rulings on four electronics manufacturers totaling 111 million euros in response to violations of EU competition law.

On 24 July 2018, the European Commission announced that four electronics manufacturers had been fined for dictating fixed and minimum prices to their online retailers for selling products and thus breaching EU competition law.

The four electronics manufacturers implemented vertical price restrictions in the form of fixed or minimum price guidelines by restricting their online merchants’ scope to set retail prices themselves for common electrical products such as laptops, hi-fi systems and kitchen appliances. If online retailers sold the products at lower prices, the manufacturers got involved, threatening, for instance, to stop delivering supplies. Because a lot of online merchants make use of price algorithms to adjust their prices in relation to the prices set by their competitors, the restrictions affect the price of the entire segment of the respective product. The European Commission went on to note that the manufacturers had access to instruments allowing them to monitor resale pricing in their sales network and quickly intervene in the event of price drops.

These measures were said to have hampered effective price competition between the retailers, and this, in turn, led to higher prices and thus had a direct impact on consumers. As a result, the electronics manufacturers had violated EU antitrust law and were reprimanded and fined by the Commission. The fines were reduced in light of all the companies cooperating with the Commission. 

Retailers and consumers affected by the manufacturers’ anti-competitive conduct are now able to assert claims for damages. We at the commercial law firm GRP Rainer Rechtsanwälte note that because of the Commission’s rulings it is no longer necessary to demonstrate that the manufacturers acted unlawfully.

As e-commerce continues to grow in importance, competition watchdogs and cartel offices will be paying closer attention. Illegal pricing arrangements hamper fair competition and may be met with severe penalties. That being said, violations of antitrust law are by no means so obvious in every other case; even individual contractual clauses can infringe existing laws. That is why agreements ought to be reviewed with a view to their implications from the perspective of competition law by lawyers who are versed in the fields of antitrust law and competition law.

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