Increased antitrust enforcement activity is being targeted at retail price maintenance (“RPM”) practices. RPM refers to an agreement which obliges a reseller to sell the distributor’s goods or services at a fixed price or above a minimum price. RPM is considered to be a breach of Irish competition law, irrespective of the parties’ market share and the impact of the RPM on the market.
In recent months, Opel and Medtronic were fined €1.1 million and €16 million respectively by Danish and Chinese regulators for RPM infringements.
Moreover, the UK regulator (the “CMA”) imposed a €1 million RPM fine on a bathroom fittings supplier and made a provisional finding in February 2017 that a lighting supplier engaged in RPM by forcing retailers to sell at or above a minimum price.
Following from this heightened global enforcement activity, the German regulator issued new draft guidelines on 25 January 2017, which signal that it is seeking to impose harsher penalties for RPM.
At European Commission level, three separate RPM investigations in the consumer electronics, video games and hotel accommodation sectors were launched in February 2017. The European Commission will investigate if certain online sales practices unfairly restrict retail prices so as to amount to RPM. These investigations were foreshadowed by the European Commission’s 2016 Preliminary Report on the E-Commerce Sector Inquiry, which highlighted RPM concerns in online markets. The Preliminary Report stated that more than two in five retailers are facing some form of price restriction. The Final Report is due to be published in the first quarter of 2017 and its findings could very well lead to more RPM investigations by the European Commission and other EU competition regulators.
Overall, recent regulatory actions suggest that businesses operating in Ireland should be prepared for RPM enforcement activity in 2017.
The Irish regulator, the Competition and Consumer Protection Commission (the “CCPC”) has historically taken a strict approach to RPM. The CCPC’s most recent RPM investigation was taken against a distributor of FitFlop shoes. In this case, the CCPC obtained a series of commitments from the distributor and these commitments were made an order of the Court, meaning that any breach of the commitments would constitute the serious offence of contempt of court.
It is important that businesses operating in Ireland are aware of the EU and Irish competition law prohibition of RPM and the active enforcement landscape. In particular, it must be recalled that RPM can take more indirect forms than an express price restriction, such as an incentive not to offer discounts, and that RPM is equally unlawful in relation to online and high street sales.
Matheson’s EU Competition and Regulatory Group regularly advises suppliers and distributors on RPM issues. If you have any queries, please contact Helen.Kelly@matheson.com