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Leadership / Digital Transformation

Four Electronics Manufacturers Fined by EU for Fixing Online Prices

The European Commission has fined four electronic manufactures nearly £100 million for fixing online resale prices across Europe.

Philips, Asus, Denon and Marantz were all found to be in breach of EU competitions rules.

All four were found to have engaged in fixed or minimum resale price maintenance; this is the process of setting up an agreement between distributors and manufactures to maintain the pricing of products at a consistent rate across the market.

All four manufactures intervened and interfered with online retailers who had been offering their commercial products at a lower cost point.

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The commission found that: “If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies.”

EU Commissioner for Competition Margrethe Vestager commented that: “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,” she stated.

Algorithmic Shenanigans

Some online retailers, especially the larger suppliers, have set up algorithms that can automatically detect when smaller retailers are doing a sale or are pushing products at a lower cost than the market.

These algorithms then automatically adapt to match or reflect the lower prices out in the market so that they can stay competitive.

So when these four companies put pressure on the smaller retailers who were selling at lower cost to draw in customers, this intervention had a knock on affect across the whole online shopping ecosystem.

This resulted in customers spending more on products than the market had naturally set.

The companies involved were also using sophisticated monitoring tools to keep an eye on the market for any price decreases so they could then put pressure to falsely correct the situation.

“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,” Ms Vestager noted.

All four companies cooperated with the commissioner and had their fines reduced by 40 percent, due to the quality of evidence that they submitted. For Pioneer the reduction was 50 percent.
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CBR Staff Writer

CBR Online legacy content.