European Commission Imposes Administrative Fines for Resale Price Maintenance Practices in the Luxury Fashion Sector

The European Commission (“Commission”) has found that EU competition rules have been infringed by three undertakings active in the design, production and distribution of luxury fashion products across the European Economic Area (“EEA”), by restricting the ability of the independent online and brick-and-mortar retailers they work with to set their own retail prices.

According to the Decision:

It is found that the undertakings restricted the ability of the independent third-party retailers they work with to set the retail prices of products designed and sold under their respective brand names. It is stated that this kind of anticompetitive behaviour increases prices and reduces choice for consumers.
It is reported that the companies interfered with the retailers’ commercial strategies by requiring them not to deviate from the recommended retail prices, to apply maximum discount rates, or to comply with specific sales periods.
In certain cases, retailers were also temporarily prohibited from offering discounts. It is stated that the undertakings aimed for their retailers to apply the same prices and sales conditions as those applied in their own direct sales channels.
It has been determined that these infringements deprived retailers of their pricing independence and reduced competition between them. In addition, it has been found that one of the undertakings imposed online sales restrictions by requesting its retailers to stop selling a specific product line online.
It has been decided that these practices constitute a single and continuous infringement of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 53 of the EEA Agreement.
It is stated that the infringements cover the entire territory of the European Economic Area (“EEA”).
The fines are determined on the basis of the Commission’s 2006 Guidelines on fines, taking into account the gravity, duration and geographical scope of the infringements, as well as the value of sales of the products concerned.
Following cooperation, a 50% reduction is applied and an administrative fine of €119 674 000 is imposed on one undertaking; another undertaking is imposed an administrative fine of €19 690 000 following a 15% reduction; and a further undertaking is imposed an administrative fine of €18 009 000 following a 50% reduction.

You can access the full text of the press release published by the Commission here.

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Zumbul Attorneys-at-Law

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