CIBA Vision, the leading German contact lens producer, has been fined €11.5 million by the German Competition Authority (“BKartA”) for breaching competition law by restricting online trade and pressurising online retailers to follow recommended resale prices.
The BKartA found that CIBA Vision had implemented a series of agreements with its direct customers, prohibiting online trading and, in particular, preventing sales of certain types of lenses via the online auction platform E-bay. In addition, CIBA Vision had operated a sophisticated “control and intervention” system, used to monitor the resale prices set by online retailers. If the resale prices offered by online retailers were found to undercut CIBA Vision’s recommended resale prices by a particular amount, CIBA Vision would contact the reseller concerned and request that they increase their prices. The BKartA concluded that in many cases, CIBA Vision’s attempts to increase resale prices this way had been successful.
The BKartA further confirmed that, although the practice of unilaterally recommending resale prices is not prohibited under German competition law, making contact beyond the mere communication of recommended resale prices by exerting pressure on resellers to increase resale prices constitutes an anti-competitive agreement or concerted practice in violation of the competition rules. In its press release the BKartA stated that agreements will consequently be found to fall foul of the competition prohibition contained in Paragraph 1 of the German Act Against Restraints of Competition where it can be established that the supplier has intervened with a view to coordinate the pricing of the reseller, and both parties agree on the reseller’s future pricing conduct.
The BKartA also noted that vertical resale price coordination by a supplier may eventually result in a horizontal agreement or concerted practice between resellers. This could be established even where no direct contact between resellers takes place provided all the resellers follow the resale price recommendations of the supplier and rely on their competitors to do the same.
CIBA Vision contests the factual and legal findings of the BKartA but has expressed its intention not to appeal the decision of the BKartA.