EU fines consumer electronics firms €111m for online price fixing

25 Jul 2018243 Views

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Latest European Commission ruling covers online sales of kitchen appliances, PCs and hi-fi products.

The European Commission (EC) has fined leading electronics companies Asus, Denon & Marantz, Philips and Pioneer €111m for online price fixing.

European competition commissioner Margrethe Vestager said that the four companies engaged in fixed or minimum resale price maintenance (RPM) by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products such as kitchen appliances, notebooks and hi-fi products.

‘As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hairdryers, notebook computers, headphones and many other products’
– MARGRETHE VESTAGER

Asus was fined €63.5m, Philips was fined €29.8m, Pioneer was fined €10.1m and Denon & Marantz was fined €7.7m.

This comes in the wake of Google being fined a record €4.34bn by the EC in relation to its business practices around the popular Android operating system. The internet giant plans to appeal the decision.

Removing speed bumps for the growing EU online economy

Vestager said that the four manufacturers intervened particularly with online retailers that offered their products at low prices. If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies.

Many, including the biggest online retailers, use pricing algorithms that automatically adapt retail prices to those of competitors. Vestager said that the restrictions imposed on low-pricing online retailers typically had a broader impact on overall online prices for the respective consumer electronics products.

Not only that, but the use of sophisticated monitoring tools allowed the manufacturers to effectively track resale price-setting in the distribution network and to intervene swiftly in case of price decreases.

“The online commerce market is growing rapidly and is now worth over €500bn in Europe every year,” Vestager said yesterday (24 July).

“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, hairdryers, 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.”

In its ruling, the EC said that Taiwan-headquartered Asus monitored the resale price for certain products such as notebooks and displays in France and Germany, and intervened to have retailers increase their prices.

The EC added that Japan-headquartered Denon & Marantz engaged in RPM in terms of the resale of audio and headphone products in Germany and the Netherlands, while Netherlands-headquartered Philips engaged in RPM for kitchen and domestic appliances in France.

It also said that Japan-headquartered Pioneer limited the ability of retailers to sell home entertainment products cross-border in Europe, with different resale prices for different member states and blocking orders for retailers. Between 2011 and 2013, this activity affected 12 regions, including Germany, France, Italy, the United Kingdom, Spain, Portugal, Sweden, Finland, Denmark, Belgium, the Netherlands and Norway.

Vestager said that the final fines were reduced to their present levels thanks to the cooperation of the companies in the investigations. The reductions ranged from 40pc for Asus, Denon & Marantz and Philips, to 50pc for Pioneer.

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com