Settlement procedure and fine for vertical price fixing in Belgium
Following a dawn raid in 2017, the Belgian Competition Authority (‘BCA’) imposed six years later a fine of €490,112 on Le Creuset for vertical price fixing (also known as resale price maintenance). Interestingly, this was in the framework of a settlement decision, which is not in all jurisdictions possible for vertical competition law infringements.
Annually, Le Creuset announced its recommended resale prices to its sales network. However, in practice the selected distributors had to abide by the prices. To enforce this, Le Creuset visited its distributors to remind them about its price policy. It also checked the resale prices either ex officio (including using mystery shoppers) or in response to complaints from other distributors. In addition, Le Creuset intervened in the distributors’ business if it had indications (for example, complaints from other distributors) that the distributors concerned did not abide by the recommended resale prices.
The decision makes clear that also promotional activities were monitored. Le Creuset punished the distributors for non-compliance. For example, it suspended orders, blocked the supply of products, refused to participate in promotions, refused to renew the selective distribution contract or sought unwinding of it, etc.
Le Creuset also sought help from other members of Le Creuset group in Europe, particularly in the Netherlands and France, to help the price policy in Belgium being respected.
It follows from the BCA’s decision that the distributors actively participated in the resale price maintenance in the sense that they sought Le Creuset’s intervention whenever other distributors did not adhere to the price policy and expected it to remedy the situation. The distributors that were approached for not respecting the price policy, informed Le Creuset when they would amend their prices, and Le Creuset, on its turn, transmitted this information to the other distributors that had complained.
The BCA had no difficulty in concluding Le Creuset’s trade practice to be resale price maintenance and a restriction “by object”. As the total fine exceeded the 10% rule (taking into account the gravity factor and the duration of 6 years and 6 months), it was reduced to the sum equivalent to 10% of Le Creuset’s annual turnover. In addition, Le Creuset was given a 10% reduction for cooperating and participating in the settlement procedure.
Interestingly despite clear indications of the distributors’ active involvement in the price policy as described above, the BCA does not hold those distributors accountable although these factual elements could point towards a typical hub-and-spoke cartel. The published decision (which is a short version in light of the settlement procedure) does not enable one to determine why the BCA did not involve the distributors and seek their cooperation and participation in the settlement procedure.
This article was published in the Competition Newsletter of February 2024. Other articles in this newsletter:
- On repeat but louder: the ACM’s 2024 priorities
- Court of Appeal of The Hague rules on liability for antitrust follow on damages claims in the elevator sector
