On December 3, 2020, the French competition authority (“FCA”) imposed a fine of €226,000 on Dammann Frères (“Dammann”), a producer of gourmet tea, for imposing resale prices on its online retailers.

Resale price maintenance

The FCA first recalled that it is not required to apply the usual three-prong test in resale price maintenance (“RPM”) cases, which is met when (i) the supplier communicated recommended retail prices (“RRPs”) to its retailers, (ii) the supplier monitored the application of its RRPs by retailers, and (iii) the retailers actually applied the RRPs. The FCA explained it did not need to apply this test if it has evidence showing an invitation from the supplier to apply its recommended prices and acceptation from the retailers, which is consistent with the FCA’s approach in the Apple decision from March 2020.[1]

The FCA noted that the RRPs issued by Dammann to its retailers matched Dammann’s own retail prices in its physical stores and on its own website. The FCA also found that Dammann’s general terms and conditions compelled retailers to align their online prices with offline prices. The retailers adhered to Dammann’s policy through online distribution agreements restricting their freedom to determine their resale prices.[2]

In addition, the FCA found that Dammann monitored whether the prices displayed on distributors’ websites complied with the RRPs and requested non-complying distributors to increase their prices.[3] If the RRPs were not applied, Dammann would implement retaliation measures against non-complying retailers, such as by removing their discounts, stopping/delaying deliveries, or blocking their accounts to prevent them from placing orders. Dammann also relied on monitoring carried out by a number of its retailers, which would inform Dammann in case of non-compliance.

Based on the above, the FCA considered that there was sufficient evidence to conclude that Dammann had imposed prices on its retailers.

Restriction of sales on online marketplaces

The FCA also examined whether Dammann had unduly restricted its distributors’ ability to sell online.

However, the FCA found that Dammann did not prohibit retailers from making online sales but only restricted sales on third-party online marketplaces. The FCA considered that this conduct did not amount to an hardcore restrictions and could qualify for an exemption under the EU Vertical Block Exemption Regulation No. 330/2010. The FCA noted in this regard that Dammann and its retailers’ market shares for online sales were below 30%.

[1]              As mentioned in FCA Decision of March 16, 2020, n°20-D-04 regarding practices in the Apple products distribution sector, in order to demonstrate the existence of a cartel, the FCA needs to establish “the invitation of a party to the agreement to implement a practice and the acquiescence to at least one other party to this invitation” (para. 833).

[2]              FCA Decision of December 3, 2020, n°20-D-20 regarding practices implemented in the gourmet tea sector, paras. 199-209.

[3]              For instance, Dammann Frères’ sales director himself stated his willingness to exert pressure on recalcitrant distributors to invite them to comply with the common discipline and to monitor that such interventions had been followed by action.