On 22 August 2014, the German Federal Cartel Office (“Bundeskartellamt”) fined a leading manufacturer of mattresses €8.2m for enforcing resale price maintenance against retailers selling its products. Between July 2005 and December 2009, the manufacturer’s representatives agreed with retailers that they should not offer certain strategic products of a well-known brand name below the sales prices set by the manufacturer.
The manufacturer enforced minimum resale prices through talks with independent retailers and purchasing cooperatives of retailers or by correspondence with the retailers requesting compliance with the minimum resale prices. Where a retailer failed to maintain the set minimum resale prices and other retailers complained about such deviation, the manufacturer repeatedly discussed the prices with the retailer. Such discussions often resulted in an agreement on a retail price. The manufacturer applied this practice to both bricks and mortar and online sales.
Due to an increase in online sales since 2005, the manufacturer offered selected online dealers to act as a “authorized online dealer” for the brand using the manufacturer’s logo and data, provided they maintained the minimum resale prices for the strategic product lines. The authorised dealer scheme was designed to bar the dealers from Google-Adwords or from Ebay for unauthorized usage of manufacturer’s data under Ebay’s brand protection programme. Further, the manufacturer enforced the retail prices by threatening certain dealers with delays in supply or legal steps.
The Bundeskartellamt initiated proceedings as a result of complaints within the market. In consequence, it investigated several companies in the industry in August 2011. Proceedings against three other manufacturers are still ongoing. The decision imposing the fine is not yet final and can be appealed to the Düsseldorf Higher Regional Court.
Under EU and German Competition law, retailers are free to set the prices they want for a certain product. Manufacturers are generally only allowed to issue non-binding price recommendations (or to set maximum prices). They are, however, not allowed to oblige their retailers to comply with minimum resale prices or to exercise pressure on them to achieve a certain price level, for instance, by threating to stop or delay supplies. Also, indirect means to raise the price, such as incentives, a ban on making special offers, rebates or clearance sales have been condemned by the EU Commission. Andreas Mundt, President of the Bundeskartellamt, highlighted that the prohibition of resale price maintenance came into force in the 1970s, yet the Bundeskartellamt still receives complaints from various economic sectors in the present day.