28. Sep 17

Bundeskartellamt imposes fine for illegal price fixing

The Bundeskartellamt, Germany’s Federal Cartel Office, has imposed fines amounting to just under 11 million euros on two companies from the clothing industry on account of illegal vertical resale price maintenance agreements.

In the present case, a clothing manufacturer and a trading company had made arrangements regarding the prohibited vertical resale price maintenance agreements. This involved the manufacturer setting minimum selling prices for merchants in advance and at the same time forbidding price reductions and the sale of the goods online. According to the Bundeskartellamt, if a merchant refused to adhere to these conditions then said merchant was threatened with suspension of deliveries, with this being followed through on in some cases. The trading company involved complied with these conditions and also apparently prompted the manufacturer to proceed accordingly in relation to other merchants offering the goods at cheaper prices.

In doing so, both cartel members had hindered free competition and harmed consumers. Agreements concerning selling prices between manufacturers and merchants violate antitrust law and are strictly prohibited. Merchants have the right to set selling prices themselves. It is not permissible to sanction those who refuse to enter into these kinds of price fixing agreements by delaying or suspending deliveries or taking similar measures.

Exceptional circumstances aside, vertical resale price maintenance agreements, i.e. agreements between manufacturers and merchants, are strictly forbidden under both German and European law. These kinds of arrangements hinder fair competition. We at the commercial law firm GRP Rainer Rechtsanwälte note that violations of antitrust law can give rise to further severe penalties in addition to fines imposed by the cartel authorities.

Furthermore, the cartel members may also be faced with claims for damages brought by the aggrieved parties. There is also the possibility of managing directors or board members from the companies involved in the prohibited arrangements being held liable.

Illegal pricing agreements are among the more obvious violations of antitrust law. However, violations are by no means always as obvious as this and can occur unwittingly. Even minor details in contractual clauses can be a cause for concern from the perspective of antitrust law and lead to severe sanctions. For this reason, it is advisable to have competent lawyers review agreements with a view their implications under antitrust law. It is also a good idea to obtain appropriate legal advice if violations of antitrust or competition law have already occurred and claims need to be fended off or enforced.

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