The Czech Office imposed a record fine of EUR 4 million for vertical resale price agreements

The Office for the Protection of Competition (“Office”) imposed a fine of CZK 97 million (approx. EUR 4 million) on the company GARLAND distributor, s.r.o. (“GARLAND”) for vertical agreements on resale price maintenance. Historically, this is the highest fine ever imposed for this type of anti-competitive conduct, which is the consequence of the new fining guidelines of the Office.

According to the decision, the company GARLAND concluded and fulfilled prohibited resale price maintenance agreements with its customers (distributors) in the period from at least 18 June 2013 to 6 June 2019, i.e. for almost 6 years. The aim of these agreements was to eliminate competition among GARLAND's distributors in the market for garden machinery, equipment and tools for hobby use in the Czech Republic.

The company GARLAND deliberately suppressed competition at the horizontal level among the retailers of the goods it supplied. Retailers could not offer these goods to end consumers at prices lower than those set by the company GARLAND. The conclusion of price agreements was initiated by the company GARLAND, which also insisted on compliance with them and enforced them under threat of sanctions (for example, blocking the customer’s account in the ordering system).

The enforcement of price agreements by the company GARLAND also led to customers themselves checking the possible non-compliance of other customers (their competitors) with the set retail prices and requesting GARLAND to provide remedies, i.e. to ensure unified higher retail prices.

This led to the elimination of price competition among retailers and maintaining a higher price level for the goods distributed to them. This first-instance decision is not final and may be appealed.

For more information contact Vojtěch Chloupek and Jiří Švejda.

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