| What you need to know - key takeaways |
- This is the first infringement finding in respect of RPM by the Commission for around 15 years.
- It is also the first time the Commission has referred to the impact of pricing software/algorithms in relation to a competition infringement decision.
- Cooperating with the Commission led to very significant fine discounts.
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According to the Commission's press release, the four manufacturers' conduct was aimed particularly at online retailers who offered their products at low prices, using sophisticated monitoring tools and threats/sanctions (such as blocking of supplies) to deter/prevent non-compliance. In particular, the Commission found that the manufacturers engaged in RPM with respect to the following:
- Asus - certain computer hardware and other electronic products, in Germany and France, from 2011 – 2014;
- Denon & Marantz – audio and video consumer products, in Germany and the Netherlands, from 2011 – 2015;
- Philips – a range of consumer electronics products (such as kitchen appliances), in France, from the end of 2011 – 2013; and
- Pioneer – a range of products including speaker sets and iPod speakers. Pioneer also restricted the ability of its retailers to sell to consumers in other Member
- States in order to sustain different resale prices, in 12 countries, from 2011 – 2013.
The Commission has found that the manufacturers' interventions limited effective price competition between retailers and led to higher consumer prices.
The Commission has imposed significant fines on all four companies, ranging from c. €7.7 million to c. €63.5 million. Of note, this includes very significant reductions of 40 per cent (in the case of Asus, Denon & Marantz and Philips) and 50 per cent (in respect of Pioneer) for cooperating with the Commission.
In an accompanying statement, Commissioner Vestager explained that all four companies admitted the infringement and provided the Commission with additional evidence, noting that: "the level of fine reduction depends on the extent and timing of the cooperation in the specific case, and the resulting benefits in terms of efficient procedure and effective enforcement. In the cases decided today, the companies acknowledged the infringement even before the issuing of a statement of objections. They also provided evidence that added significant value to what was already in the Commission's file. This allowed for a number of administrative efficiencies."
Such levels of discount are significantly higher than the 10 per cent that can be achieved under the Commission's formal settlement procedure, which only applies to cartel cases. However, more significant discounts (up to 100 per cent immunity) can be obtained in cartel cases under the Commission's leniency regime. The approach in the latest RPM cases follow that taken in 2016, when the Commission granted a significant discount of 30 per cent for cooperation in the Article 102 ARA Foreclosure case.
The press release also notes that many online retailers use pricing algorithms that automatically adapt retail prices to those of competitors, and as a result, the pricing restrictions imposed on low pricing online retailers "typically had a broader impact on overall online prices for the respective consumer electronics products".
This is the first time the Commission has referred to this type of software in the context of an actual infringement decision, albeit there has been much recent discussion of the possible impact of such algorithms on competition. While it does not appear that the decision is condemning the algorithms themselves, if this software can increase the impact of RPM measures beyond merely the customers targeted, this may encourage authorities to pursue more RPM-type cases going forward.
With thanks to Danica Barley of Ashurst for her contribution.
