Foreign direct investment screening in the Netherlands – FAQ
Much like in other EU Member States, Foreign Direct Investments (FDI) screening has become a hot topic in the Netherlands. …
On 29 September 2021, the Dutch competition authority (Autoriteit Consument & Markt) (ACM) published the news that it had imposed a fine of over 39 million euros on Samsung Electronics Benelux B.V. (Samsung) for unlawfully influencing the retail prices of televisions. With this decision, the ACM has put enforcement of vertical agreements and practices back on its agenda after a long period of low priority.
According to the ACM, Samsung actively exercised undue influence on the online sales prices of televisions over seven major retailers in the period 2013 – 2018. Through so-called web crawlers / spider software, Samsung automatically monitored the price movements of its television models at retailers. If Samsung saw prices below its desired price level, it contacted retailers and urged them to adjust their sales prices. Conversely, retailers also regularly complained to Samsung about competitors’ pricing and Samsung took action against those competing retailers. According to Samsung, this was merely indicative price advice – which is not prohibited – and it did not exert pressure or provide incentives to actually align the price with the recommended price. However, the ACM believes that the contacts between Samsung and the individual retailers clearly went beyond the mere provision of indicative list prices or non-binding recommended prices. Since Samsung informed the retailers back and forth, the retailers knew that they would not price themselves out of the market if they followed Samsung’s price. According to the ACM, Samsung thereby directly infringed competition between retailers, leading to higher prices for consumers. The ACM therefore decided to impose a fine on Samsung.
The ACM does not have an extensive history in vertical cases. In 2000, the legal predecessor of the ACM imposed the last fine for resale price maintenance on fashion company Secon Group, which owned several clothing brands at the time including G-Star. The Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven) later annulled this fine. In 2003 and 2013, the ACM and its legal predecessor initiated investigations into possible vertical infringements in the beer market, but these did not result in any fines. In 2015, the ACM even stated that it would give little priority to vertical agreements due to the usually limited harmful effects on competition. In doing so, the ACM deviated from European practice (see our earlier blog).
However, a radical change of course was announced at the end of 2018. At that time, the ACM announced that it had launched an investigation into price fixing between manufacturers and retailers in the field of consumer goods. Approximately three years later, this led to the fine for Samsung. In 2020, the ACM announced another similar investigation in the home furnishings sector, but this investigation was closed again in 2021. In addition, when the fine for Samsung was announced, the ACM simultaneously announced a campaign to warn suppliers and retailers about prohibited vertical price agreements. As part of this campaign, the ACM launched a self-check for companies on minimum prices.
The ACM only published a short summary of the Samsung decision on 29 September 2021 and a short explanation on its website. Therefore, ACM’s exact legal assessment of Samsung’s conduct is not clear yet. However, immediately noticeable is that neither on the ACM’s website nor in the short summary of the decision, the ACM explicitly refers to price fixing. This is the common competition law term for this type of conduct, as defined in Article 4(a) of the Vertical Block Exemption Regulation. However, in its publications the ACM uses other terms such as price influencing and price alignment. It will therefore be interesting to see how the ACM has substantiated that Samsung’s price recommendations fall within the legal framework of price fixing in the final decision. In that regard, it is noteworthy that the ACM considers, in Samsung’s advantage, that this case concerns price alignment in which there is no (threat of) sanctions or the application of (financial) incentives.
Pressure or punitive measures are not a requirement for price fixing (see Notice on Vertical Agreements), however, this often occurs in price fixing cases (see for example: EU fine manufacturers of consumer electronics). The question is whether (only) repeated requests for a certain price can qualify as – prohibited – resale price maintenance. It appears to follow from the ACM’s self-check that the ACM itself considers repeated price recommendations to be risky, but not a clear violation of competition law. The German competition authority (Bundeskartellamt) also seems to consider such repeated advice (merely) risky. It will be interesting to see how the ACM substantiated this in the final Samsung decision.
Also, the ACM only imposes a fine on Samsung and leaves the retailers involved out of harm’s way. Regarding the conduct, the ACM points out that retailers did go along with the prices communicated by Samsung, but it was Samsung that played the central role in the coordination. Later, the ACM calls Samsung the “spider in the web“. Despite that qualification, the ACM apparently does not regard the infringement as a hub-and-spoke cartel between retailers (via Samsung), but solely as an infringement by Samsung itself. Although the case does contain prima facie indications of a hub-and-spoke cartel (in which the prohibited coordination primarily takes place amongst retailers) and the ACM has the power to fine retailers for price fixing, the ACM deliberately chose not to impose a fine on the retailers.
The information that the ACM has released so far about Samsung’s infringement is still limited. It will be interesting to see what the exact substantiation will be of the ACM in the final decision – this will undoubtedly be published later. Samsung has already made known that it will appeal the ACM’s decision. The discussion will probably then focus on whether Samsung has indeed interfered with the pricing of retailers to such an extent that the conduct qualifies as resale price maintenance. For now, the case shows that the ACM is once again giving its full attention to the enforcement of vertical agreements and that ACM does not shy away from substantial fines in that regard.
For more information on price maintenance or other competition law related questions, please contact Ruben Elkerbout, Berend Reuder, Mattijs Baneke or Linde Bremmer of Stek’s Competition and Regulated Markets team.
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