On August 22, 2019, the Polynesian Competition Authority (PCA) imposed a fine of 235 million CFP francs (about 2 million euros) on the retail division of the Wane group for having imposed excessively high prices for the refrigeration of its suppliers’ beverages.[1] This is the first abuse of dominance decision and, more generally, the first contentious ruling by the PCA since its creation in 2016.

In French Polynesia, beverages are mainly sold in refrigerated displays. Historically, the main suppliers of beverages provided retailers with refrigerators when supplying beverages. However, in the 2010s, the main retailers decided to acquire their own refrigerators. In this context, Wane’s retail division decided to charge suppliers of beverages for access to its refrigerators. While some suppliers first refused to pay (leading the Wane group to stop displaying their beverages ), they gradually accepted Wane’s pricing conditions. However, some of them complained to the PCA.

The PCA found that the retail division of the Wane group, one of the largest retailers in Polynesia, enjoyed a dominant position in the French Polynesian markets for the procurement of several types of beverages (in which it competes with other retail chains, such as “Carrefour” and “Système U”).

The PCA then held that Wane’s retail division had abused its dominant position through price discrimination and excessive pricing.

First, the PCA considered that Wane’s retail division had engaged in first-line discrimination by applying discriminatory pricing conditions to suppliers of beverages until December 2015 without any objective justification. The PCA indeed found that some of the suppliers (including Bevco, a subsidiary of the Wane group) did not have to pay to have their beverages placed in the retailer’s refrigerated displays, while others suffered a competitive disadvantage, as they were charged for this service (and the price actually charged varied among the suppliers concerned). The Authority also considered that it did not have to show an actual quantifiable deterioration of the competitive position of the wronged suppliers to demonstrate the effects of the practice. Although price discrimination by a dominant undertaking is prohibited by Polynesian competition law since its entry into force in February 2015, such conduct only became punishable by the PCA in February 2016. Therefore, the PCA did not fine Wane’s retail division for such behaviour.

Second, the PCA considered that prices charged between 2016 and 2018 by Wane’s retail division for this refrigeration service were excessive. Referring to ECJ case law, the PCA stated that prices can be considered abusive when they bear no reasonable relation to the economic value of the product supplied, i.e. (i) when there is a significant difference between the price actually charged by the dominant undertaking and the price which that undertaking would have obtained had there been effective competition in the market, and (ii) if so, when the actual price is unfair, either in itself or when compared to competing products. In this respect, the PCA considered, in particular, that Wane’s charging for the use of its refrigerators was not justified, as it did not correspond to any identified service, in light of the specificities of the Polynesian market (in which beverages are mostly sold refrigerated). In any event, the PCA found that prices charged were excessive compared to (i) prices charged by other retail chains, (ii) prices charged in another similar geographic market, namely New Caledonia, (iii) prices charged by Wane’s retail division before 2016 and (iv) specific costs associated with the provision of this “service” by Wane’s retail division. In this regard, the Authority rejected the dominant undertaking’s argument that the prices charged reflected the economic value of the service provided to suppliers. This illustrates, once again, the difficulty in establishing a benchmark to determine whether or not prices can be deemed unfair.

As this was the PCA fine for abuse of dominance, the Authority decided “to emphasize the educational value of this sanction” and therefore reduced the amount of the fine by 50%. The retail division of the Wane group, along with its parent company, were ultimately fined 235 million CFP francs (about 2 million euros).

The PCA’s decision follows a recent decision of the French Competition Authority (FCA) in Sanicorse where the FCA imposed a €199,000 fine on the only infectious medical waste treatment company present in Corsica for having abused its dominant position through excessive price increases.[2] The FCA found that Sanicorse had abruptly, significantly and lastingly increased the price of waste disposal services charged to hospitals and clinics in Corsica between 2011 and 2015 without any objective justification. Both decisions follow the recent renewed interest of European competition authorities for excessive pricing.

[1]              Decision of the Polynesian Competition Authority of August 22, 2019, No.2019-PAC-01.

[2]              Decision of the French Competition Authority of September 20 2018, No.18-D-17.