CN07 - Eyewear manufacturers fined for price fixing and restrictions on internet sales

On 22 July 2021, the French Competition Authority ('FCA') sanctioned four eyewear manufacturers for fixing their retail prices and prohibiting opticians from making internet sales. However, ten suppliers were able to avoid sanctions after establishing that the limitation period had expired, including a supplier which had entered into the FCA's settlement procedure.

Key takeaways

• The FCA is prevented from taking enforcement action in respect of anticompetitive practices which were brought to an end more than ten years before the date of the FCA's infringement decision.
• The FCA's decision suggests that entering into a settlement procedure does not prevent a company subsequently raising a limitation period defence.

The FCA has recently concluded an investigation into breaches of competition law by several eyewear manufacturers, including the world's leading manufacturer of eyewear.  The investigation was opened more than ten years ago and has resulted in sanctions for (a) resale price maintenance and (b) unjustified restrictions on the ability of opticians to make internet sales.

There were differences in the practices of each of the manufacturers under investigation.  However, in broad terms, those manufacturers found to have engaged in resale price maintenance had been regulating the prices and promotions that could be offered by opticians.  Such regulation was achieved through monitoring the application of 'recommended prices' with the help of other distributors, and by applying sanctions on those opticians who did not apply the recommended prices.  Those sanctions included delaying or suspending deliveries and withdrawing authorisations required to distribute the products and facilitated serious infringements of competition law.  

As regards restrictions on internet sales, the FCA found express contractual clauses which had the effect of banning internet sales in certain manufacturers' licensing agreements and in charters signed by authorised distributors.  Competition authorities take a dim view of restrictions on internet sales in the absence of an objective reason for any restriction.

Five separate statements of objections were notified to 14 companies.  However, only three companies were finally sanctioned as a number of the manufacturers were able to benefit from a limitation period defence.  In particular:

• the relevant manufacturers successfully argued that there was no proof that the alleged anticompetitive practices had continued after 2009;
• under French competition law, the FCA is required to begin investigating alleged infringements of competition law within five years of the date those alleged infringements occurred; and
• even when an investigation is commenced within the five year period, an undertaking may not be sanctioned where there is a delay of more than ten years between the date that the anticompetitive practices were brought to an end and the date of the FCA's infringement decision.

Interestingly, the limitation defence also benefited a manufacturer who had entered into a settlement procedure with the FCA.  Companies entering into a settlement procedure with the FCA  are required  to provide a commitment not to contest the FCA's findings.  In this respect, it is unclear whether the FCA acknowledged the limitation period issue ex officio or whether the manufacturers were permitted to raise the limitation period defence after a settlement agreement had been reached.  If it is the latter, this case is expected to increase the attractiveness of the settlement procedure to companies under investigation for historic breaches of competition law in relation to which there is uncertainty as to the date when the infringement came to an end.