With the imposition of a fine of almost 40 million Euros on Samsung in September 2021, the Dutch Competition Authority (“ACM”) firmly set its enforcement focus on undue price influencing in vertical relations. In anticipation of the renewed EU Vertical Block Exemption Regulation (“VBER”) and taking into account the new Guidelines on vertical restraints published in May 2022, which confirm Resale Price Maintenance as a hardcore restriction of competition under Article 101 TFEU, the ACM embarked on a crusade against price influencing by adopting several initiatives to eradicate any restrictive conduct by suppliers with respect to the resale prices of their buyers.
In the course of 2022, the ACM took its first steps into the crusade after the Samsung decision by warning suppliers publicly not to influence prices adopted by buyers, following several signals from buyers who considered themselves the ‘victims’ of undue price influencing. The ACM stressed that only non-binding recommended or maximum retail prices by a supplier are allowed, and companies exerting undue influence on their buyers to comply with price recommendations risk a fine up to €900,000 or 10% of the annual turnover. This warning was echoed in the ACM’s Guidelines on Arrangements between suppliers and buyers last summer, which, amongst other hardcore restrictions, elaborated on price influencing. The ACM included an example of anti-competitive price influencing in its Guidelines and stated that suppliers are only allowed to impose maximum resale prices on buyers. The ACM then launched a full-blown campaign to emphasize that retailers should set retail prices in their (online) stores, without any interference or pressure from suppliers. ACM’s campaign consisted of an online dashboard for buyers (in Dutch) including a price-check-tool, FAQs and a template complaint letter for buyers to send to suppliers objecting against alleged price influencing.
On 21 November 2022, the ACM confirmed its decision to fine Samsung, rejecting (in Dutch) Samsung’s administrative appeal on all grounds. The ACM maintained that Samsung exercised undue influence over the online selling prices of television sets by its seven retailers from January 2013 to December 2018 (see also our earlier blog about this decision). Samsung argued that the ACM in its decision had failed to establish vertical price restraints and had thus not proven any restriction by object. According to Samsung, vertical conduct can only constitute a hardcore restriction when it involves either price fixing or market sharing. Samsung also claimed that the General Court's judgment in JCB Service (at par. 130) shows that price influence must be accompanied by coercive measures in order to qualify as a by object restriction. The ACM stated that Samsung’s conduct was evidently intended to restrict retailers’ freedom to set prices and thus qualified as a by object restriction. That the fine decision did not label the conduct as resale price maintenance does not alter this conclusion. The terminology used in the fining decision distinguishes Samsung's conduct from conduct where a supplier uses more unilateral coercion, penalties or direct financial incentives to restrict customers' ability to set resale prices. Samsung was well aware that this behaviour is prohibited and more subtly but no less effectively directed the price behaviour of its suppliers. The ACM concluded that, regardless of the definition of ‘vertical price fixing’, the practices of Samsung fell within the ‘general’ framework of a restriction by object and within the prohibition of Article 4a of the VBER: restricting the buyer’s ability to freely determine its resale price.
Samsung also claimed that its conduct had merely influenced retailers, which would be permissible as long as customers were effectively free to set their own selling prices. Samsung argued that retailers who wished to deviate from the recommended retail price had always been able to make use of this option. ACM rebutted this by pointing out that the facts proved Samsung's contentions to be incorrect. Its behaviour went far beyond the simple influencing of customers by drawing their attention to recommended prices in a non-committal manner. The evidence shows that Samsung expected its customers to follow up on the requests to observe recommended prices. The ACM considered that coercion and sanctions by Samsung on the non-compliant behaviour of retailers was not required to establish Samsung's conduct as a by object restriction. Moreover, Samsung has been found to have incidentally threatened its customers with consequences for not following recommended prices, contributing to the qualification of a by object restriction.
The ACM thus dismissed Samsung’s objections to the decision and upheld its decision and fine on similar grounds. Samsung announced that it would lodge an appeal with the Rotterdam District Court against the decisions of the ACM. We expect more to follow in 2023, as the Samsung saga still continues, and the ACM appears to have not yet reached the destination of its crusade after initiating its campaign. The judgment in the Samsung case clarifying the extent to which price influencing can be qualified as a by object restriction, is awaited eagerly.
Most recently, the ACM launched a preliminary investigation into price influencing through trade associations of health-care providers. The ACM alleges that it has received signals that these trade associations have influenced individual negotiations between their members and health insurers regarding 2023 health insurance contracts. The trade associations, allegedly, ‘recommended’ health-care providers to obtain a price increase of a certain percentage, which potentially qualifies as price influencing.
While the ACM leaves no doubt on its interpretation that any vertical price influencing should be regarded as a hardcore restriction, we believe that the new VBER will bring relief for many suppliers struggling to balance margins for online and offline resale of their products. As described in our analysis of the new VBER, it abandons the old VBER’s ban on ‘dual-pricing’. This is a system where the supplier charges higher wholesale prices (or gives less discount) for products sold online than for products sold offline. Dual pricing is now allowed, provided that the difference in pricing is objective (i.e., rent of a brick and mortar store, salary of personnel) and it does not have the object of restricting sales to particular territories or customers. To many suppliers, the possibility of (justified) dual pricing offers a solution to many problems with online sales channels: it can prevent free-riding and price-dumping through online channels and incentivise investments in offline sales with better customer service, in-store testing etc., whilst not limiting any retailer in establishing its own resale prices.