The Dutch ACM strikes another blow against coordinating retail prices
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On 12 September 2023, the Dutch Competition Authority (“ACM”) imposed a nearly 8 million Euro fine on television sets manufacturer LG Electronics Benelux Sales B.V. (“LG”) for actively influencing prices of retailers. The last action before this decision in the ACM’s crusade against vertical price influencing was the rejection of Samsungs administrative appeals in November 2022 against a fine of nearly 40 million Euros for unduly influencing online selling process of television sets. The decision of the ACM to fine LG shows that the ACM’s crusade regarding vertical restrictions is not over (yet).
ACM Decision
From 2015 through 2018, LG concluded illegal price-fixing agreements with seven large retailers on the online retail prices of television sets. LG provided a recommended resale price (“RRP”) to its retailers and requested them to actually charge these prices per email, followed up per WhatsApp to ensure that the retailers would comply with that price. According to the ACM, the communication between LG employees and retailers demonstrates that LG actively influenced the online retail prices of retailers, more specifically webshops.
LG monitored the retail prices through market analysis and ‘monitoring’ tools based on (historical) data about online-sales prices, allowing LG to identify the retailer ‘initiating’ price decreases. These analyses allowed LG to determine internally whether a retailer should be notified of his ‘non-compliant’ prices. LG-employees would contact the retailers to comply with the RRP, for example by stating: “please make sure that all […] products […] are on [RRP] this afternoon at 3pm. Everyone is going to do this” and “We are going to put all open models on [RRP] with X% margin this week.. you will get the list later. Everyone including [Retailer 4] and [Retailer 11] are pushed to cooperate..Thnks".
LG consistently confronted retailers if they charged retail prices that were lower than the recommended prices. LG also requested retailers to refrain from automatically following lower prices of other retailers. Moreover, retailers informed LG if they encountered competitors who did not comply with the ‘recommended’ prices, leading LG appealing to that competitor to comply with LG’s prices. As observed by the ACM: “[Retailer 2] [sent] five screen shots from the website of [Retailer 22] to LG, showing that [Retailer 22] is offering several televisions at a low selling price. LG sends five angry emoticons and says, ‘Is surely [Retailer 22]?’ To which [Retailer 2] responds, ‘Yes I took those pictures myself.’ The next day, LG sends to [Retailer 2]: ‘[Retailer 22] = fixed’.
Based on this conduct, the ACM considers that LG persuaded individual retailers to increase prices to the level suggested by LG or to seize discounts. In addition, LG requested retailers to refrain from advertising specific special deals on price comparison websites. LG consistently refers to ‘recommended prices’ or ‘RRP’, but the ACM clearly states that LG went beyond advising a recommended resale price and requested retailers to adjust their prices to the “recommended” price level of LG. The requests diminish the non-binding character of what LG calls ‘advices’ and prevents retailers to determine their retail prices independently.
Closing remarks
The most remarkable difference between the Samsung and LG decisions is the height of the fine imposed on LG compared to the almost five times higher (almost 8 million Euros and almost 40 million Euros) fine imposed on Samsung, as well as that the LG decision is nearly two years later than the Samsung decision. The difference in the amount of fines can of course be, explained due to the higher relevant turnover in the Samsung decision (665 million Euros versus 139 million Euros) and Samsungs larger market share (around 46% versus 15% between 2015 and 2018) was significantly greater.
These enforcement priorities and these ACM decisions are not unexpected given the very recent Super Bock-judgment (CJEU 29 June 2023, C-211/22, ECLI:EU:C:2023:529 (Super Bock Bebidas), para. 33-38 and 52), where the Court of Justice of the European Union also qualified ‘recommendations’ of a supplier which were followed by resellers as vertical price fixing agreements and as restrictions by object. This LG-decision as well as the Samsung decision and the Super Bock-judgment stress the relevance of the RPM prohibition and that suppliers should not engage into communications and/or practices resulting in resale price maintenance. Recommended resale prices should be real (!) recommendations and not recommendations that must be followed.
For more information, please contact Janneke Kohlen and Quirijn Mohr.
