Days after fining Google a whopping €4.3 billion due to its breach of antitrust rules, the EU commission has now cracked down on four major companies, Philips, Denon & Marantz, Asus, and Pioneer, for the violation of the same. The four companies have been charged a combined fine of €111 million based on allegations of “imposing fixed or minimum resale prices on their online retailers in breach of EU competition rules”, states the Commission’s official press release.
The four companies had allegedly partaken in “fixed or minimum resale price maintenance (RPM)”, thereby restricting the online retailers’ ability to fix their own retail prices based on market conditions. In most cases, online retailers fix the prices of retail goods using pricing algorithms which automatically adapt retail prices to those prices set by their competitors. However, the intervention of the manufacturers not only affected the manner in which the retailers went about conducting their businesses but also affected overall online prices for the respective consumer electronics products; thereby increasing the prices of consumer products by a wide margin.
The official press release throws light on the problem caused by the companies’ intervention in the following statement: “The price interventions limited effective price competition between retailers and led to higher prices with an immediate effect on consumers.”
Asus has been accused of monitoring the resale price of retailers for certain computer hardware and electronics products such as notebooks and displays; Denon & Marantz of monitoring resale prices of audio and video consumer products such as headphones and speakers of the brands Denon, Marantz and Boston Acoustics; Philips of monitoring the same of consumer electronics products such as kitchen appliances, coffee machines, vacuum cleaners, home cinema and home video systems, electric toothbrushes, hair driers and trimmers; and Pioneer of limiting the ability of its retailers to sell-cross border to consumers in other Member States in order to sustain different resale prices in different Member States, in addition to its monitoring of the resale prices of products like home theatre products, iPod speakers, speaker sets. Among the threats faced by retailers on refusing to comply with the pricing requested by the manufacturers was the threat of blocking of supplies.
Commenting on the incident, Commissioner Margrethe Vestager, in charge of competition policy, has said: “The online commerce market is growing rapidly and is now worth over 500 billion euros in Europe every year. More than half of Europeans now shop online. As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products. This is illegal under EU antitrust rules. Our decisions today show that EU competition rules serve to protect consumers where companies stand in the way of more price competition and better choice.”