In 2022, the Consumer & Market Authority (ACM) launched their ‘Who determines the price?’ campaign. With this campaign, the ACM wanted to emphasise to the retailers that they are the ones who get to set the consumer prices and not the suppliers. A year before, the ACM imposed a fine of more than 39 million euros on Samsung for undue influence on online consumer prices of televisions from seven retailers. Competitor LG followed in September this year with a fine of almost 8 million euros for similar behaviour.
The ACM’s active enforcement in this area, in conjunction with the entry into force of the new Vertical Block Exemption Regulation in 2022 (“European regulation”) and its Guidelines, are bringing the supplier-retailer relationship into the spotlight. However, the retailer’s position often remains underexposed, even though he might be at risk of becoming the victim of the supplier’s illicit behaviour. All the more reason to pay attention to this in this blog and highlight some key points.
Exchange of information between supplier and buyer
The exchange of information between the supplier and buyer is further restricted under European regulations in case the supplier is in direct competition with its buyer. This is also known as dual distribution. Dual distribution can arise, for example, when a manufacturer chooses to sell to consumers not only through a distributor, but also through its own web shop. In this case, information may only be exchanged between the manufacturer and the distributor if strictly necessary and directly related to the performance of the distribution agreement. This aims to ensure that the supplier and its distributors remain fully competitive.
Recommended retail prices without coercion
Despite the fact that in practice it often occurs differently, suppliers may only impose recommended prices without exerting any form of pressure on the buyers to adopt this price. Pressure can include a penalty system in which the supplier imposes a fine on a retailer in case he deviates from the recommended price. But also consider reward systems, in which the retailer receives a bonus from the supplier if he adheres to the recommended prices. In some cases it is permissible to temporarily impose a fixed price on the buyer, for example in some cases where a new product is being launched.
Different purchase prices online & offline sales
A supplier may choose to charge different prices for online and offline sales. This dual pricing may encourage certain investments in online or offline sales. However, there are limits to this, especially when the different prices are applied to limit the actual use of the internet to sell the goods or services.
A supplier may not restrict online sales in such a way as to hinder internet sales. The use of online advertising channels, such as price comparison websites and search engines, is an important tool for online sales. For this, there should not be a total ban from the supplier on the use of online advertising channels, as this prevents the effective use of the internet. However, prohibiting the use of specific price comparison services or search engines is generally allowed, as the buyer is still able to use other online advertising channels. For the use of online marketplaces, the supplier is also allowed to restrict their use by imposing quality requirements. In practice, this may mean that no online marketplace can meet these quality requirements. However, it remains possible in this situation for the buyer to use other online sales channels.
We recommend that you always have a restriction from the supplier on your online sales assessed on a case-by-case basis. This way, you avoid the risk of nullity of the agreements with the supplier.
What to do in case of undue influence from the supplier?
It is important not to allow yourself to be pressured by the supplier. After all, improper behaviour by the supplier can also have unpleasant consequences for the retailer in case you do not distance yourself from this behaviour. Among other things, the ACM can launch lengthy investigations and raid the retailer’s premises. In addition, agreements that violate European regulations are void.
SOLV regularly advises clients on (un)lawful conduct between suppliers, distributors and retailers. Earlier, we wrote a blog on the VBER and its Guidelines from 2022 in which we further elaborated on the new rules for making agreements between suppliers and distributors.
Do you experience pressure from your supplier, or are there other questions you have as a response to this or our previous blog? Please feel free to contact our competition specialists Kim van Haastrecht or Kirsten Lenssen.