ACM warns suppliers of dog food: retailers must be free to set their own prices
Summary
- ACM has issued a warning to various suppliers that sell dog food.
- They have influenced the sale prices of their products that are sold by retailers such as pet stores, thereby keeping the consumer prices of their products artificially high.
- ACM will check whether the companies that have been warned will comply with the rules now.
The Netherlands Authority for Consumers and Markets (ACM) has issued a warning to various suppliers that sell dog food. Suppliers have influenced the sale prices of their products that are sold by retailers such as pet stores. That is prohibited. With such practices, suppliers keep the consumer prices of their products artificially high. ACM has warned nine companies, and has informed many other businesses in the sector about the rules. ACM will check whether the companies that have been warned will comply with the rules now.
Reports filed with ACM have also revealed that several producers exercise influence over the sale prices of retailers through wholesalers. This is not allowed. Both producers and wholesalers risk fines of up to 900,000 euros or 40 percent of their turnovers.
Martijn Snoep, Chairman of the Board of ACM, explains: “Retailers must be able to set their own sale prices of the products in their stores, both online and offline. Therefore, suppliers cannot exercise any pressure on retailers to raise consumer prices. Dog owners want the best for their dogs. That means they might be more willing to shell out money. Suppliers in this sector seem to take advantage of that willingness. Dog owners are thus the victims of that.”
Recommended retail price must be without obligations
Suppliers must give retailers the freedom to set their own sale prices and discounts. That is why suppliers are only allowed to give retailers non-binding recommendations regarding sale prices. In this way, retailers are able to compete fairly with each other, and dog owners pay a fair price for dog food.
Suppliers cannot exert any influence whatsoever over the sale prices of retailers. This means that:
- Suppliers cannot confront retailers with their own sale prices.
- Suppliers cannot stop supplying retailers if they do not adhere to the recommended retail prices nor can they reward retailers that do adhere to those prices.
- Suppliers cannot keep on reminding retailers of recommended retail prices or emphasizing sale prices of other retailers.
- Suppliers cannot instruct others, such as wholesalers, to exert influence over sale prices of retailers.
- Suppliers cannot comply with requests from retailers to confront other retailers with their sale prices.
Are you unsure if something is allowed or not? ACM has compiled a checklist for recommended retail prices (in Dutch) to help suppliers and retailers. With this checklist, suppliers can check whether or not they are compliant. Retailers can verify whether their suppliers exercise illegal influence over the sale prices in their stores, both online and offline.
Warning: preventing further harm to consumers and businesses
In this case, ACM chose to issue a warning. This is an efficient way to ensure that a business adjusts its practices and to prevent further harm to consumers or businesses. For ACM, the effect of its actions is central. ACM does not wish to simply penalize violations, but also to tackle the root causes (such as a lack of awareness of the competition rules) and to prevent repeat violations. To that end, ACM can choose from a wide range of instruments.
Reporting illegal arrangements to ACM
Do you suspect suppliers of exercising illegal influence over retail prices? You can help us by filing a report.