In its decision of 19 August 2019, the Swiss Competition Commission (ComCo) fined Stöckli Swiss Sports, a Swiss manufacturer of skis and other sports products, for vertical price fixing. The fine was rather low at approximately Sfr140,000, as Stöckli had filed a leniency application and entered into an amicable settlement with ComCo.
The settlement decision is one of several in which manufacturers themselves reported vertical infringements. Further, it underscores ComCo's strict approach vis-à-vis hardcore vertical agreements. It also sheds light on how ComCo views restrictions of selective (online) distribution in Switzerland.
Stöckli maintains a selective distribution system with independent dealers. In parallel, Stöckli is vertically integrated and runs its own 16 Stöckli-branded stores. According to most of the distribution contracts, Stöckli dealers were, among other things, obligated not to:
- undercut Stöckli's recommended resale prices and thus Stöckli's Swiss resale prices with regard to Stöckli skis;
- communicate prices over the Internet;
- sell Stöckli skis over the Internet; or
- make or tolerate any cross deliveries of Stöckli skis.
The Secretariat of ComCo carried out a market observation in February 2018 based on consumer complaints. In May 2018 the Secretariat of ComCo opened a pre-investigation. During the pre-investigation, Stöckli submitted several distribution agreements. A market survey showed that 88% to 95% of the dealers respected the recommended resale price and therefore the minimum Swiss resale prices for Stöckli skis. In addition, Stöckli dealers responded to ComCo's questionnaire that they did not feel free to set an independent resale price.
Against this background, ComCo opened a formal investigation in October 2018. The investigation focused on vertical restrictions for Stöckli skis, excluding other Stöckli products such as clothing and bikes. After opening the investigation, Stöckli filed a leniency application. The decision does not reveal why the leniency application was not submitted during the pre-investigation, which could possibly have settled the proceedings without any penalties.
In its investigation, ComCo qualified the obligation of Stöckli dealers not to sell under the recommended resale prices as a vertical hardcore restriction (Article 5(4) CartA). Despite the existence of inter-brand competition (Stöckli's market share amounts to 10% to 20%), according to the Gaba decision of the Federal Supreme Court, such clauses significantly restrict competition (Article 5(1) CartA) regardless of the actual effects of such clauses.
As efficiency justifications were not eminent, Stöckli entered into a settlement with the Secretariat of ComCo. The settlement obligates Stöckli not to:
- set minimum or fixed prices for its dealers (either directly or indirectly) and to clearly indicate that their recommended resale prices are not binding;
- prohibit dealers communicating resale prices over the Internet;
- restrict internet sales for its dealers in Switzerland, although it is allowed to define quality standards regarding internet sales and to require the dealers to have at least one physical point of sale;
- restrict cross supplies within its selective distribution system between Stöckli dealers in Switzerland or from foreign Stöckli dealers to Swiss Stöckli dealers; or
- limit passive sales of foreign distributors to Swiss Stöckli dealers or impose an obligation on foreign distributors to limit passive sales of foreign dealers to Swiss consumers.
The amicable settlement, together with the leniency application, resulted in a fine reduction of 70%. According to ComCo, as Stöckli had played a leading role in the anti-competitive distribution agreements, it was not granted full immunity.
This decision confirms ComCo's strict approach with regard to vertical price fixing following the Gaba decision of the Federal Supreme Court. Companies must be aware that the Gaba prejudice also has an impact on distribution agreements that were concluded long before the Federal Supreme Court's decision. Therefore, there is also a considerable risk of penalties for older distribution agreements containing hardcore agreements.
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