Under German law, vertical price fixing constitutes a regulatory offence, which comes regularly with a severe fine. The FCO on 25 January 2017 publicised a draft guidance note on vertical price fixing in the brick-and-mortar food retail sector. By giving general explanations regarding the legal and economical background of vertical price fixing under German and European Community Law and also presenting relevant decisions of the FCO in former antitrust proceedings, the FCO intends to offer guidance especially to small and medium-sized companies. In addition the guidance note also means to replace the unofficial guideline published by the FCO in 2010. This was necessary, as the 2010 guideline was worded in a rather imprecise way, which caused profound legal uncertainties on the side of the addressed companies.
Against this background, the guidance note addresses several issues that have regularly proven to pose difficulties for the market participants. As such, the guidance note illustrates the issues of vertical price fixing with reference to prices of third party retailers, the illegitimacy of fixed or minimum sale prices as a result of pressure from or incentives offered by the other party and the identification of unlawful compensation requirements for disappointed earnings forecasts.
Furthermore, the guidance note deals with the topic of data exchange between retailers and suppliers. Whereas the transfer of data on sales prices and quantities between retailers and suppliers is generally to be regarded as legal, the exchange of data regarding future price calculations and intended promotion prices is held to be anticompetitive by the FCO.
As to the important issue of recommended resale prices, the guidance note uses several case studies in order to cover problematic examples and to provide a more specific legal framework of the term “recommended”.
Although it can be argued that the guidance note remains rather vague and lacks the necessary degree of clarity one would wish in order to make business decisions based on the guidance note, it is important to remember that the document now published by the FCO is still a draft version and that the respective consultation is still ongoing. Thus, there is room for hope that the final version of the guidance note will provide a higher degree of clarity at least with respect to some of the problematic issues addressed.
The guidance note reflects the interpretation of law by the FCO. It is important to note that this guideline does not have any binding legal effect, the definitive interpretation can only be given by the courts. However, the note is of importance as good guidance to companies on the FCO’s view of the law.