Pricing issues are regulated by the Treaty on the Functioning of the European Union (“TFEU”). The growth of e-commerce has led the EU Commission to focus its attention on vertical agreements: agreements between parties at different levels of the supply chain. Resale price maintenance (“RPM”) is price fixing in a vertical agreement. RPM occurs when retailers commit to their suppliers not to resell a product below an agreed price. EU competition law strictly prohibits RPM as it may facilitate collusion among suppliers. Direct and indirect forms of RPM are prohibited, including fixing margins, setting a maximum discount, requiring manufacturers’ consent to revise prices, and intimidation.
RPM is strictly illegal, although there are a few exceptions for new product launches.
Article 101(3) of the TFEU provides circumstances where RPM can be justified if certain criteria are met. These circumstances include short term pricing campaigns, efforts to prevent free-riding, and new product launches. For RPM to be justified it must contribute to improving the production or distribution of goods or to promoting technical or economic progress; consumers must receive a fair share of the resulting benefits; the restrictions must be essential to achieving these objectives; and the agreement must not give the parties any possibility of eliminating competition in respect of substantial elements of the products in question.
In 2018 the Commission fined four consumer electronics manufacturers Asus, Denon & Marantz, Philips, and Pioneer, in four separate decisions, over €111 million for engaging in RPM. The manufacturers restricted their online retailers’ ability to set their own prices. Retailers that did not follow the prices requested by the manufacturers were threatened or had sanctions imposed on them such as blocking of supplies. These price interventions by the manufacturers limited competition among retailers and led to higher prices for consumers. Asus monitored the resale price of retailers for computer hardware and electronics products in Germany and France. Denon & Marantz engaged in RPM with respect to audio and video consumer products in Germany and the Netherlands. Philips engaged in RPM with respect to several consumer electronics products in France. Pioneer restricted the ability of its retailers to sell cross border to consumers in other Member States in twelve countries. The four manufacturers were found to be in violation of Article 101 of the TFEU, which prohibits agreements and decisions that prevent, restrict, or distort competition within the EU’s Single Market. The fines were reduced for the four manufacturers, dependent on their levels of cooperation. The fines for Asus, Denon & Marantz, and Philips were reduced by 40% and the fine for Pioneer was reduced by 50%.
In 2018, the Commission fined Guess €39.8 million for continuous infringement of Article 101 of the TFEU. Guess restricted retailers from online advertising and selling to consumers in other Member States. Through this practice, Guess was able to maintain artificially high retail prices. The Commission opened a formal antitrust investigation against Guess in 2017. The investigation revealed that Guess’ distribution agreements restricted retailers from using the Guess brand names and trademarks for the purposes of online search advertising and selling online without a prior specific authorization by Guess. The company had full discretion for this authorization, which was not based on any specified quality criteria; selling to consumers located outside the authorized retailers’ allocated territories; cross-selling among authorized wholesalers and retailers; and independently deciding on the retail price at which they sell Guess products.” The retail prices of Guess products were significantly higher in certain parts of Europe. The European Single Market prides itself on the possibility to shop cross-borders for variety and better deals; Guess’ actions were in direct violation. Guess’ fine was reduced by 50% because it cooperated with the Commission and provided further evidence. Guess admitted to prohibiting the use of Guess brand names and trademarks for the purposes of online search advertising. The Guess case was the first time the Commission reached an infringement decision relating to online search advertising restrictions.
Online sales are a passive form of selling and may not be restricted. However, online activity that is the equivalent of active selling, such as targeted advertisements, may be restricted. Suppliers cannot charge a distributor a higher price for a product sold online than when the same product is sold in a store. Additionally, suppliers can impose quality standards on distributors’ websites.
Suppliers with a dominant position must be careful to avoid a breach of Article 102 on abuse of dominance. In 2017, the Commission fined Intel €1.06 billion for creating conditional rebates that would exclude a competitor from the market for CPUs and for making payments to manufacturers to delay, cancel, or restrict the marketing of products equipped with the competitor’s CPUs. The General Court upheld the fine; Intel then went before the Court of Justice (CJEU). Intel argued that there was no evidence of actual competitive harm. For the first time in an exclusivity rebate case, the CJEU required an effects-based analysis. The CJEU has requested that the General Court review its judgment by assessing the elements of the extent of dominance, the share of the market the rebate covers; the duration and percentage of the rebate; strategy to exclude rivals; and issues raised by Intel concerning the price/cost assessment in the decision. In 2022, the General Court found that rebates are not anti-competitive by nature and to find conduct anti-competitive, an effects test is necessary. Furthermore, the General Court found that exclusivity rebates cannot be presumed to be an abuse of dominance. The Intel case will change the way that abuse of dominance cases are handled in the future as it marks a movement towards the consideration of the economic impact of conduct through effects tests.
By: Mallory McKenna
 Antitrust: Commission fines four consumer electronics manufacturers for fixing online resale prices, European Commission (July 24, 2018), https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4601
 Antitrust: Commission fines Guess €40 million for anticompetitive agreements to block cross-border sales, European Commission (December 17, 2018), https://ec.europa.eu/commission/presscorner/detail/en/IP_18_6844
 Intel Corporation Inc. v. Commission (2017)