Resale price maintenance? Not every discussion on reseller's pricing is illegal

Introduction
Background
Decision

Introduction

According to antitrust law principles, suppliers are prohibited from imposing resale prices on their retailers. German law is particularly strict in this respect, as is its interpretation by the Federal Cartel Office (FCO). Any form of pressure not to reduce prices below a certain level (including the granting of advantages) is prohibited.

However, the Dusseldorf Higher Regional Court has clarified that not every discussion on resale prices is prohibited. Even the termination of a supply relationship by the supplier due to the retailer's sales prices failing to meet its expectations is permissible. However, suppliers should beware: threatening a retailer with non-supply if they fail to enforce a certain price level is illegal.

Background

Suppliers cannot restrict a buyer's ability to determine its sale prices. This refers to both minimum and fixed prices (including price components, surcharges and discounts).

Recommending a resale price is generally permissible. However, suppliers must not exert pressure or offer incentives in order to enforce a certain price level. Under German antitrust law, it is not just agreements on a retailer's sales prices which are inadmissible; the exertion of pressure on the retailer is also prohibited. The FCO is strict in its understanding of what constitutes such pressure. In its 2009 decision on CIBA, the FCO stated that:

Any contact beyond the mere communication of [a recommended retail price] and its emphasis by subsequently and repeatedly addressing the subject – in particular with regard to the trader's current pricing behaviour – calls the [recommended retail price's] non-binding character into question and is to be regarded as an exertion of pressure.

In 2012 the Berlin Higher Regional Court confirmed this practice of the FCO (KG Berlin, 2 February 2012 – 2 U 2/06 Kart). However, that same year, the Federal Supreme Court explicitly left open the question of whether any such contact must be regarded as a violation of competition law (BGH, 6 November 2012 – KZR 13/12, para 5 f.).

Decision

In a recent decision, the Dusseldorf Higher Regional Court clarified that not every discussion or exchange regarding pricing will contravene cartel law, stating that "[i]t is correct that… not every discussion or exchange with regard to the pricing of the latter can be assumed to have an effect on the freedom of will of the addressed company" (8 July 2020 – VI-U (Kart) 3/20).

The supplier's behaviour is prohibited only if the retailer is under the impression that it is expected to behave in a certain way with regard to prices and that it will be disadvantaged if it refuses to do so. A communication, for example, in the form of urgent 'advice' not to continue the cooperation with the retailer with reference to its pricing policy is prohibited in this respect.

By contrast, the final termination of supply based on the retailer's prices is permissible. According to the Dusseldorf court, there is no element of pressure on the retailer's future sales prices following such termination:

Section 21 (2) of the [Act against Restraints of Competition] does not therefore prevent a manufacturer from blocking a retailer because the sales prices do not correspond to the manufacturer's expectations, if this does not at the same time induce the blocked retailer to act in the manufacturer's future interests, but the block is intended to be final.

For further information on this topic please contact Sascha Dethof at Fieldfisher (Germany) LLP by telephone (+49 211 950 749 0) or email (sascha.dethof@fieldfisher.com). The Fieldfisher (Germany) LLP website can be accessed at www.fieldfisher.com.