The Netherlands Authority for Consumers and Markets (ACM) imposes a fine of over 39 million euros on Samsung Electronics Benelux B.V. (Samsung). From January 2013 through December 2018, Samsung exercised undue influence on the online retail prices of television sets of seven retailers.
Martijn Snoep, Chairman of the Board of ACM, explains: “Under the pretense of ‘price recommendations’, Samsung made sure that retailers increased their prices to the market price that Samsung desired. The retailers followed Samsung’s recommendations because Samsung, as the one pulling all the strings, also consistently confronted other retailers if they charged too low prices. Samsung knew it could not compel retailers to increase their prices. That is why Samsung associates used the term ‘recommendations’, but, in reality, those recommendations were neither personal nor non-binding. Samsung’s practices disrupted competition at the retail level, and resulted in higher prices for consumers.”
How did it work?
Samsung monitored the online retail prices of retailers in an automated manner using so-called web crawlers. If Samsung saw prices that were lower than its desired market price, it contacted those retailers and urged them to increase their prices. WhatsApp messages and emails that ACM collected during dawn raids revealed that, in those interactions, Samsung often informed them that it had urged or would urge other retailers in a similar manner: “all other partnered parties have been advised.” Retailers replied to Samsung that they had increased the price: “Done, visible in 15 min”. Conversely, the retailers asked Samsung to confront retailers that used too low prices. This often happened by using screenshots. Samsung regularly acted on such complaints, and informed the complaining retailers: “Advised”, or: “Ugh. Will do something about this… again.”
As Samsung constantly informed these retailers, they knew that they would not price themselves out of the market if they followed Samsung’s price. In that way, Samsung unduly intervened directly in the competition between retailers.
Prices of new television models quickly drop after their introductions on the market. Samsung sought to counter this process by coordinating prices with retailers. Through this price coordination, Samsung protected its own margins as well as the retailers’ margins at the expense of consumers.
What is and what is not allowed between suppliers and buyers?
Every retailer must set their own retail prices. Monitoring online retail prices by suppliers is, in and of itself, allowed. Suppliers can also give retailers non-binding price recommendations. However, suppliers that influence the prices of retailers by, for example, informing those retailers about the planned prices of competitor retailers go too far. The same goes for retailers complaining to suppliers about the retail prices used by other retailers. Suppliers must ignore such complaints.
ACM launches an awareness campaign to warn suppliers and retailers about prohibited vertical price restraints. In its campaign, ACM explains to market participants what rules they need to comply with.