Retail Price Maintenance in the EU

By Vojtech Chloupek, Kristina Kudelikova

10-2020

A classic price-fixing arrangement typically takes the form of a cartel, i.e. a price fixing arrangement between competitors. Price fixing is also prohibited for companies in a vertical relationship (active at different levels of the supply chain such as a manufacturer and a retailer).

In a vertical relationship, the practice is known as Retail Price Maintenance (‘RPM’). A manufacturer or supplier is prohibited from restricting the ability of a retailer to determine its own resale price, such as imposing minimum or fixed prices. The EU Vertical Restraints Block Exemption Regulation classifies such restriction as hardcore.

EU competition law prohibits both direct and indirect forms of RPM. Examples of indirect forms of RPM include: fixing margins, setting a maximum discount, requiring that retailers obtain the manufacturers' consent to revise their prices, intimidation, the use of price reporting and monitoring systems putting pressure on retailers to deter discounting, warnings and similar practices. Importantly, EU competition law does allow recommended and maximum resale prices (the latter act as a ceiling for prices, thereby benefit consumers).

There are two examples of recent enforcement action in relation to RMP. In July 2018, the Commission fined four consumer electronics companies €111 million in July 2018. The companies had allegedly restricted online retailers from deciding on the price of their products by using pricing algorithms. The Commission also fined a fashion manufacturer €40 million in December 2018, who, among other unfair practices, had restricted retailers to independently decide on the price of Guess products.

For more information contact Vojtech Chloupek and Kristina Kudelikova.

 
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