There are still fines for resale price maintenance?!

The European Football Championship is in full swing. The whole of Europe is following the exciting matches – either at public viewings or in front of the TV at home. Euphoria is spreading across the continent. The mood could hardly be better. Just the right time, the German Federal Cartel Office must have thought, to tell German consumers that they might have paid “too much” for their WiFi router/repeater, which is currently providing them with this wonderful football TV experience.

This week, the German Federal Cartel Office (FCO) imposed fines of approx. EUR 16 million on (i) AVM Computersysteme Vertriebs GmbH (AVM), a German based company that is particularly known for its WiFi routers and repeaters under the brand “FRITZ!”, and (ii) one of AVM’s employees for restricting retailers’ pricing.

The case has three elements that stood out for me – two of which also highlight important differences between German and European antitrust law.

No “partner in crime” needed

As we all know and to put it very simply, resale price maintenance (RPM) is about a manufacturer setting sales prices that a retailer may not fall below. Whether or not the retailer adheres to such sales prices and/or whether there is a mutual understanding or even an agreement among the manufacturer and the retailer is – at least under German antitrust rules – not decisive for whether there is a breach of antitrust law. German antitrust law (Section 21(2) ARC) also sanctions unilateral conduct of a company that is meant to induce other undertakings to engage in respective anticompetitive conduct, namely violations of Art. 101 AEUV.

This is an important difference to European antitrust law according to which also in the context of RPM – as the European Court of Justice reminded everyone in Super Bock last year (see here) – an infringement of Art. 101 TFEU requires an agreement between at least two companies.

The FCO’s press release on fining AVM leaves room for interpretation as to whether the FCO found an agreement on RPM between AVM and the retailers or whether it only fined AVM’s unilateral conduct. While the press release on the one hand states that “AVM has coordinated increases of end consumer prices with electronics retailers” it also says that no fines have been imposed on the retailers involved. However, only fining the manufacturer is not uncommon for the FCO, which so far imposed additional fines on retailers only in few cases.

Personal fines

The FCO’s press release mentions only very briefly that besides AVM also one of its employees has been fined for contributing to the anticompetitive conduct. This “light” form of reporting is just too typical, as personal fines for individuals often only receive little attention next to the very high (sometimes even three-digit-million) fines imposed on companies.

Given that personal fines, which can go up to up to EUR 1 million in Germany, might be better suited than company fines to deter individuals from antitrust infringements (at least this is my impression when the topic comes up during compliance trainings), one could wish for a more prominent role of personal fines in the FCO‘s press releases. Also bearing in mind that personal fines cannot be imposed under European antitrust law, it would sometimes be desirable to draw attention to the risk of personal fines under German antitrust law more prominently. In fact, the FCO has a long-standing practice of fining individuals in RPM cases, for example in relation to cosmetics products (2013), bicycles (2019) and musical instruments (2021).

Whistleblowing

When thinking about cartel detection, first things that regularly come to mind are leniency programs and – lately often reported about – the authorities’ own new investigative IT tools. In the case at hand, and this form of cartel detection is sometimes forgotten about, the trigger has been a tip-off to the FCO’s whistleblowing system that – alongside hints from other market participants – initially started the proceeding and led to dawn raids back in 2022.

The case insofar serves as an illustrative example for the effectiveness of the FCO’s anonymous electronic whistle-blowing system as a tool for detecting anticompetitive behavior. Given that many retailers (or their employees) might disagree with RPM but refrain from openly discussing this with the manufacturers for various reasons, whistleblowing might be considered an effective and anonymous tool to challenge RPM practices.

The detection absent a leniency application is also in line with the recent overall trend in cartel detection, in which more and more proceedings are not kicked off by the “traditional” leniency application. Last year, less than 50% of FCO cartel proceedings seem to have been caused by leniency applications.

This ties in with what FCO president Mundt noted last week: “In addition to our leniency programme, which remains important, modern IT allows us to systematically monitor markets and identify irregularities. Our external reporting unit for anonymous whistleblowers also plays an increasingly important role.”

Takeaways

There are five takeaways from the FCO’s decision:

• Keep in mind: Merely unilateral conduct can be fined – at least under German antitrust law. In this respect, German and European antitrust law differ.

• Don’t forget: Not only companies, but also individuals involved in anticompetitive behavior can be fined under German antitrust law. Companies should ensure that their employees are properly alerted, not least to provide a further incentive for compliant behavior through the threat of a personal fine.

• Don’t underestimate: The FCO’s electronic and anonymous whistleblower system has proven as a suitable and effective tool for uncovering anticompetitive behavior.

• Appeal vs. risk: Given that RPM and fines have been an issue for decades, it might be surprising that companies still violate the ban on RPM. The commercial upside of such behavior might be too appealing, or the risk of detection might seem too remote.

• And last but not least: Don’t let your football summer fairytale be tainted by a router that some might claim you have bought a little too expensive.

Photo by Emma Dau on Unsplash