Belgian competition authority fines kitchen accessories company Le Creuset for maintaining resale prices – antitrust, EU competition

Antitrust issues in vertical relationships are no longer below the “radar” of competition authorities. This trend, which focuses not only on horizontal but also vertical competition law violations, resulted in Le Creuset being fined 490,112 euros for implementing a resale price maintenance policy with its distributors over a six-and-a-half year period. This was seen again in the decision of the Belgian Competition Authority. .

RPM as Compromised by Object

Le Creuset Benelux (“Le Creuset”) is a Belgian and Luxembourg-based company specializing in luxury kitchenware and wine accessories, selling directly to customers through its own physical stores, online shop, and through a network of distributors. I am.

An investigation by the Belgian Competition Authority (“BCA”), which began in March 2017, found that between 2009 and 2016, Le Creuset changed the recommended resale price each year when presenting new wholesale prices to distributors. It turned out that the company also informed the sales agent about the recommended promotion and resale. price. Although these resale prices were designated as “recommended,” the reality is that Le Creuset expects its distributors to strictly enforce those prices and apply promotional prices within a certain period of time. The BCA has found evidence that this is the case. When Le Creuset introduced his selective distribution system in 2013, one of the essential criteria was to specifically respect Le Creuset's pricing policy. In addition, Le Creuset monitored the resale prices applied by its distributors and employed “pressure” tactics and penalties for violations. For example, Le Creuset regularly reminded its distributors of the importance of respecting Le Creuset's pricing policy through email, phone calls, and visits. Le Creuset monitors distributor prices by checking Internet sites, visiting physical stores, mystery shopping, and discussing retailer prices with competing retailers. Ta. Le Creuset also informed retailers of the fact that other retailers have already applied compliant prices and promotions. In the event of a violation, Le Creuset may suspend orders, block deliveries, deny promotions, terminate or fail to renew selective distribution agreements, or terminate a retailer's premium distributor status. It was.

The Belgian Competition College found that Le Creuset's pricing policy was in fact tantamount to imposing a minimum resale price. This vertical restriction on the freedom of Le Creuset distributors to set their own resale prices (also known as “resale price maintenance”) constitutes a restriction of competition in goods, which is defined in Article 101 of the Convention on the Functions of Goods. It is prohibited under Article 1. Article IV.1 §1 of the European Union (“TFEU”) and the Belgian Economic Code (“BCEL”). For this serious violation of competition law, the university imposed a fine of 490.112 euros on Le Creuset.

some points

The fine of 490.112 euros was set taking into account the statutory maximum fine of 10% of the infringer's group annual turnover. In this case, the maximum value was still calculated based on Le Creuset's annual report. Belgian Sales (as provided by law at the time of Le Creuset's infringement). However, companies should be aware that the Belgian Economic Code was amended in this regard in 2019. As a result, the BCA can now impose fines of up to 10% of a company's annual turnover for restrictive practices undertaken since then. World wide Even if such practices were limited to Belgium. A significant increase in the maximum fine amount was introduced to strengthen the deterrent effect.

One thing to note is the University's emphasis on dealer participation in the Resale Price Maintenance Scheme. The decision explains that distributors, through their actions, contributed to, or at least acquiesced in, Le Creuset's minimum resale price policy. In practice, they apply prices in line with this policy, monitor the prices charged by competitors, and when they find that prices are not in line with Le Creuset's policy, they lodge complaints with Le Creuset and asked Kruse to intervene. At Le Creuset's request, the distributor agreed to the price change and provided information regarding current and/or future prices. Ultimately, the distributor agreed to Le Creuset's intervention in planning the promotion. It was important for the university to find an agreement between Le Creuset and its distributors regarding a resale price maintenance scheme. A mere unilateral act by Le Creuset could only have been punishable under Article 102 TFEU or Article IV.2 BCEL (Prohibition of Abuse of Dominant Power), but that would have meant that the University Only if you can prove that you are dominant. By emphasizing the participation of distributors, universities may qualify Le Creuset's pricing policy as a vertical restrictive arrangement falling within the prohibitions of Article 101 TFEU and Article IV.1 BCEL. However, despite the distributors' active role in the scheme, the university stopped short of fining them for their cooperation.

Finally, it is interesting to note that this is not the first time the BCA has imposed fines to maintain resale prices. In January 2023, cosmetics company Caudalie was fined for imposing sales restrictions and applying a resale price maintenance program (see here, here, and here for blog posts about the Caudalie case). The fine imposed on Le Creuset should serve as a reminder and warning to companies that competition authorities, including the BCA, are no longer ignoring vertical practices.

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