Summary
On December 19, 2024, the French Competition Authority (“FCA”) imposed fines totalling €611 million on 10 manufacturers and two distributors (selling primarily in brick and mortar stores) active in the household appliances sector for engaging in resale price maintenance (“RPM”) practices between February 2007 and December 2014 (the “Decision”).[1] The FCA found that the companies coordinated prices to limit competition from online distributors for over seven years. This is the second largest fine ever levied by the FCA regarding purely vertical practices and the highest fines ever imposed (in absolute terms) on distributors for RPM practices. The FCA also ordered the publication of a summary of the Decision in the paper and online editions of Le Monde and Les Echos’newspapers. However, the FCA rejected the objection relating to a potential horizontal agreement between manufacturers of small domestic appliances.
Background
Following a complaint to the Directorate General for Competition Policy, Consumer Affairs, and Fraud Control (“DGCCRF”), the FCA carried out dawn raids in 2013 and 2014. In 2015, Bosch sought leniency. In 2016, the FCA split the investigation into two separate cases: (i) one concerning horizontal price-fixing resulting in €189 million in fines imposed on six companies (Bosch, Candy Hoover, Eberhardt Frères, Electrolux, Indesit, and Whirlpool) in 2018[2], and (ii) another case regarding the RPM practices at stake in this Decision.
The Decision
On February 21, 2023 (i.e., almost 10 years after the dawn raids), the FCA notified objections for violation of competition laws through RPM practices to 12 companies. All companies settled, except for SEB and Boulanger who contested the objections.
In its Decision, the FCA confirmed the objections, finding that between February 2007 and December 2014, 10 manufacturers — Bosch, Candy Hoover, Eberhardt, Electrolux, Indesit (taken over by Whirlpool), LG, Miele, SEB, Smeg, and Whirlpool — entered into individual agreements with Boulanger and Darty (distributors mainly selling in brick and mortar stores), to set retail prices.
French distributors Boulanger and Darty could have tried to use their position to bring an end to the anticompetitive practices. On the contrary, the Decision found that they played an active role in initiating and implementing the RPM practices. They also sought “margin compensation” from manufacturers if a competing distributor applied lower prices. In addition, Boulanger and Darty monitored competitors’ prices to ensure that in-store prices were not undercut by online prices, often requesting manufacturers to intervene when spotting discrepancies.
To establish the RPM practices, the FCA applied the established three-part legal test.[3]
- Communication of “recommended” prices. The FCA found that manufacturers communicated so-called “recommended” retail prices, which were meant to be set prices. Several distributors reported to the FCA that manufacturers used coded language such as “stock prices” or “sensible product” to conceal the true intent behind the communications. A number of online distributors also told the FCA that manufacturers exerted pressure on them to “activate” or to “do the necessary” and, as a result, those distributors enforced these “recommended” retail prices.
- Monitoring. The FCA found that manufacturers actively monitored – with the active support of Boulanger and Darty – whether distributors adhered to the “recommended” prices, via online tools that tracked retail prices, distributor by distributor, in real time.
- Retaliation. Manufacturers retaliated against online distributors who did not comply with the “recommended” prices, through delays in shipments or the ban on the sale of certain products.
The FCA considered these practices to be particularly serious because they were (i) “institutionalized” (i.e., systematically incorporated into the companies’ regular operations), (ii) “conducted covertly”, and (iii) “involved a large proportion of active market participants”.
No horizontal information exchange
The FCA dismissed the horizontal information exchanges concerns. The FCA’s investigation services had alleged that the manufacturers of small domestic appliances had entered into anticompetitive horizontal information exchanges through a trade association (the Groupement Interprofessionnel des Fabricants d’Appareils d’Équipement Ménager (“GIFAM”)) involving the sharing of individualised data on past sales volumes by product category. However, the FCA concluded that the shared data was not commercially sensitive enough to impact the market, and that the exchange did not undermine the autonomy of the participating companies.
Erga omnes effect of the suspension of the 10-year statute of limitations
It is surprising to note that it took the FCA almost 10 years after the dawn raids to issue its statement of objections. In that context, several companies argued that the practices were time-barred pursuant to the 10-year statute of limitations because the FCA adopted the Decision more than 10 years after the dawn raids conducted on the premises of several companies. The suspension of the 10-year statute of limitations, they argued, only applied to the parties who filed appeals against the dawn raids, and not vis-à-vis the other parties involved in the case. However, the FCA considered in the Decision that the suspension of the 10-year statute of limitations had an erga omnes effect without much justification, i.e., that it had affected all the other parties involved in the conduct – thereby going against European case law.[4]
Takeaways
The Decision underscores the FCA’s ongoing focus on online restrictions. The FCA has indeed adopted several fining decisions to sanction online restrictions in the recent years.[5]
The FCA imposed the largest fines ever on distributors for RPM practices (in absolute terms) representing over 30% of the total fine amount, which reflects the active role played by Boulanger and Darty in the conduct.
The Decision may be subject to appeal. The two companies who have not settled may challenge the FCA decision in court. The other parties can challenge the regularity of the procedure and the proportionality of the sanction, provided that they do not contest the penalty range agreed upon in the settlement agreement.[6]
[1] See FCA decision No. 24-D-11 of December 19, 2024, relating to practices implemented in the household appliances sector.
[2] See FCA decision No.18-D-24 of December 5, 2018, relating to practices implemented in the household appliances sector.
[3] See FCA decision No. 24-D-11 of December 19, 2024, relating to practices implemented in the household appliances sector, paras 577-588.
[4] ArcelorMittal Luxembourg v. Commission and Commission v. ArcelorMittal Luxembourg and Others (C-201/09 P and C-216/09 P) EU:C:2011:190, para. 145. See also Japan Airlines Co. Ltd v. Commission, (T-340/17) EU:T:2022:181, para. 205 ; Cathay Pacific Airways Ltd v. Commission, (T-343/17) EU:T:2022:184, para. 228; and LATAM Airlines Group SA et Lan Cargo SA v. Commission, (T-344/17), EU:T:2022:185, para. 117.
[5] See in the last two years, FCA decision No. 23-D-12 of December 11, 2023, relating to practices implemented in the premium tea sector (Mariage Frères); FCA decision No. 23-D-13 of December 19, 2023, relating to practices implemented in the luxury watch distribution sector (Rolex); and FCA decision No. 24-D-02 of February 6, 2024, regarding practices implemented in the chocolate distribution sector (De Neuville).
[6] Paris Court of Appeal, 13 June 2019, Alcyon, RG 18/20229.