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FCO continues to act against price fixing by manufacturers against distributors: Alhambra guitars

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Germany

Under pressure from the Federal Cartel Office (FCO), guitar manufacturer Alhambra has distanced itself from influencing the selling prices of wholesalers and distributors.

Alhambra's conduct
The FCO investigated Alhambra on the suspicion that it had:

  • exerted pressure on wholesalers and distributors to comply with minimum prices on the German market; and

  • urged distributors to raise their retail prices.

Decision
Alhambra had distanced itself under pressure from the FCO. In August 2020 the guitar manufacturer reacted to this by handing out an updated price list to German distributors, which for the first time showed non-binding recommended retail prices (RRPs) that were comprehensible to consumers. The company also clarified in a circular letter that pricing is the distributor's responsibility and that Alhambra will not influence this.
The case was subsequently closed without the imposition of a fine.

FCO's actions against price fixing
The FCO has been active in the field of price fixing in recent years. For example, it has set strict standards when companies have enforced RRPs. Further, in 2017 the FCO published a guidance paper on the issue and the Dusseldorf Higher Regional Court recently ruled on the subject (for further details please see "Resale price maintenance? Not every discussion on reseller's pricing is illegal").
Some of the FCO's recent cases regarding price fixing are as follows.

Price fixing for bicycles (February 2019)
On 29 January 2019 the FCO imposed a fine totalling approximately €13.4 million on bicycle wholesaler ZEG Zweirad-Einkaufs-Genossenschaft eG (ZEG), Cologne, and those responsible for the price fixing.(1) According to the FCO's findings, ZEG had agreed with 47 bicycle retailers that the minimum selling prices set by ZEG could not be undercut. ZEG monitored the compliance with this restriction.
Price fixing in the clothing sector (July 2017)
In 2017 the FCO imposed fines of approximately €10.9 million on manufacturer Wellensteyn and trading company Peek & Cloppenburg Düsseldorf.(2) The accusation was that Wellensteyn had enforced the RRPs in Germany, especially for outdoor jackets by:

  • agreeing with distributors not to reduce prices even at the end of the season;

  • threatening and imposing penalties for enforcement;

  • imposing temporary delivery blocks; and

granting benefits such as product returns to larger customers in return for maintaining prices.

Price fixing in the furniture sector (January 2017)
On 12 January 2017 the FCO imposed fines totalling €4.43 million on the five manufacturers aeris GmbH, hülsta-werke Hüls GmbH & Co KG, Kettler GmbH, Rolf Benz AG & Co KG and Zebra Nord GmbH, as well as four responsible managers.(3) According to the FCO's findings, the manufacturers had exerted undue pressure on cheaper distributors, particularly by threatening and in some cases enforcing delivery blocks. In some cases, competing distributors also monitored compliance with the minimum prices by submitting reports of 'deviators' and asking the manufacturers to ensure that the price level was maintained.

Price fixing in the food trade (December 2016)
In December 2016 the FCO imposed fines totalling €18.3 million on several food merchants, including Edeka, in the so-called 'vertical case'.(4) Between 2006 and 2009, the companies were involved in agreements on the pricing of beer. In May 2016 11 companies involved in the food trade were fined because of vertical agreements amounting €112 million. The vertical case included confectionery, coffee, animal food, beer and personal care products. In total, 38 individual fines were imposed on 27 companies with a total volume of €260.5 million. The procedure began in 2010 with investigations.

Price fixing of LEGO highlights (January 2016)
In January 2016 the FCO imposed a fine of €130,000 on LEGO GmbH for vertical price control.(5) LEGO had urged retailers to raise the end-customer prices of the so-called 'highlight articles'. LEGO threatened to terminate the supply and based the amount of price reductions on the compliance with the recommendations. The retailers and the articles were recorded in lists for monitoring.

Vertical price fixing in the mattress case (October 2015)
The FCO imposed fines against Recticel Schlafkomfort GmbH and Metzeler Schaum GmbH because of prohibited price fixing of their retailers.(6) Recticel had to pay €8.2 million (August 2014) and Metzeler €3.38 million (February 2015). The proceedings were concluded in October 2015 with the imposition of a fine of €15.5 million against Tempur Deutschland GmbH.

Retail price maintenance and 'street prices' (May 2015)
In May 2015 United Navigation GmbH was fined €300,000.(7) Over a five-year period, the company had agreed with its retailers (especially online retailers) that they would not undercut the RRPs for portable navigation devices. If the price level was not complied with, the retailers were requested to enforce a 'street price', which was stipulated in addition to the RRP, and threatened with the termination of supply or legal steps.

Vertical price fixing in the cosmetics sector (July 2013)
In July 2013 the FCO imposed a fine of €6.5 million against WALA Heilmittel GmbH.(8) According to the FCO's allegation, the company had applied pressure on its retailers and terminated the supply if the prescribed non-binding RRPs were not complied with.

Enforcement of recommended resale prices (August 2012)
In August 2012 TTS Tooltechnik was fined €8.3 million.(9) According to the FCO's findings, TTS Tooltechnik had demanded retailers to comply with its prices and threatened to worsen the supply conditions or terminate supply if they failed to comply.

Kick-back rebates (June 2010)
According to the FCO's allegation, Garmin had offered special rebates to resellers that distributed Garmin navigation devices at particularly low prices over the Internet, in order not to undercut the RRPs.(10) Therefore, in June 2010 the FCO imposed a fine of €2.5 million.

Monitoring (September 2009)
The FCO held that contact lenses manufacturer CIBA had maintained a system that enabled it to monitor resellers' internet prices.(11) In case of deviating prices, the relevant resellers were contacted and asked to raise their prices. The FCO imposed a fine of €11.5 million.

Agreements on resale prices (April 2009)
In April 2009 the FCO fined Microsoft €9 million.(12) According to the FCO's findings, Microsoft had fixed the resale price of a software package for certain resellers.

Price recommendation (2009)
In 2009 leading manufacturers and suppliers of spectacle lenses provided opticians with price recommendations which included the opticians' crafting services.(13) Most opticians observed these prices, effectively turning them into minimum prices. Due to pressure exerted by the FCO, the manufacturers have now refrained from issuing RRP lists. Due to the agreement, the FCO imposed no fines.

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Antitrust