Between 2007 and 2014, major manufacturers, including Darty and Whirlpool, engaged in price-fixing practices that hindered competition and kept appliance prices artificially high. These tactics involved coercive measures to enforce pricing compliance among retailers. Following a 2018 conviction, a recent ruling resulted in hefty fines for these companies, with Seb facing the largest at 189.5 million euros. Most firms admitted wrongdoing, while the practices significantly reduced online market competition.
Overview of Price-Fixing Practices from 2007 to 2014
In a significant ruling, the competition authority has highlighted how traditional retailers faced challenges from online commerce beginning in 2007. On December 19, 2024, a substantial fine was levied against prominent manufacturers, including Darty, Boulanger, Electrolux, Seb, Whirlpool, and LG, for engaging in a widespread price-fixing scheme designed to suppress competition and maintain profit margins.
This misconduct spanned from 2007 to 2014 and follows a previous conviction in 2018, where a fine of 189 million euros was imposed for similar violations. The authority claims that these manufacturers established “vertical retail price-fixing practices” that ultimately harmed consumers by preventing them from accessing more competitive prices on household appliances.
Strategies to Enforce Price Control
The manufacturers employed various “retaliatory” tactics, including delivery delays and contractual agreements favoring physical stores, to ensure compliance among authorized resellers. Their objective was clear: to prevent these retailers from selling below the suggested price. This price was perceived by distributors as a mandatory figure, as noted by the competition authority.
Retailers like Darty and Boulanger not only adhered to these pricing guidelines but actively monitored other distributors as well. The authority’s findings revealed that manufacturers identified non-compliant resellers and sought “margin compensations” in response to aggressive pricing from online competitors.
Negotiations often relied on ambiguous language and hints, with phrases indicating that compliance was expected for product availability. Many online retailers reported that manufacturers feared being recorded during phone calls and preferred to communicate in person to avoid leaving a digital trail.
The implications of these practices were substantial, leading to a notable reduction in intra-brand competition during a time when online sales were gaining traction. An interviewed distributor estimated that around 95% of the online distributors active at the start of these practices had either vanished or been acquired by traditional retailers.
In terms of penalties, Seb received the largest fine of 189.5 million euros, followed by Darty at 109 million euros and Boulanger at 84.35 million euros. The authority expressed that these distributors had enough influence to potentially halt the anti-competitive practices. Out of the twelve companies involved, ten opted not to contest the penalties, admitting to the violations, while Seb and Boulanger’s attempts to challenge the fines were unsuccessful.