Resale Price Maintenance (RPM) in Belgium

Belgian law does not include specific rules on RPM. Therefore, the Belgian Competition Authority (BCA) and the Belgian Courts rely on Article 101 of the Treaty on the Functioning of the European Union (TFEU) and its Belgian equivalent, Article IV.1 of the Code of Economic Law to deal with RPM matters. Whereas in the past the BCA did only rarely investigate restrictions in vertical agreements, this has changed in 2017 with the imposition of a fine in the Yeast Producer Case and with the opening of several investigations in vertical agreements following dawn raids. Moreover, private enforcement before the regular courts of RPM issues, in particular in the framework of general litigation between principals and their distributors, has also become more common.

Belgian approach towards different types of RPM:

Fixed prices setting is prohibited, as shown in the following cases:

  • Mermans/VCR Case: In its decision of 8 December 1998, the BCA found that vertical price fixing, whether it aims at fixing minimum prices, minimum margins or the prohibition or regulation of discounts on the resale price, are incompatible with Belgian Competition Law.
  • Laroy – Duvo: On 25 March 1997, the BCA ordered the undertakings Laroy and Duvo to stop the imposition of RPM on their distributors, subject to daily penalty payments. The undertakings required their distributors to sell their goods at fixed prices and would cease to supply them if they would deviate from these.

Price recommendations are on the other hand allowed as long as the distributor genuinely remains free to determine his resale price. Over the years, the BCA has repeatedly taken decisions with regard to recommended prices by federations of liberal professions or other service providers; among the cases are:

  • Institute of Professional Real Estate Agents Case: In its decision of 16 August 2010, the BCA concluded that the Professional Institute for Real Estate Agents had infringed the Belgian and European competition rules (Article 101 TFEU) by adopting and publishing recommended minimum fees between 1996 and 2004. The BCA did not impose a fine, but considered that any direct or indirect influence by an association on the freedom of its members to determine their prices was a serious infringement of competition law. The BCA argued that other means were available to offer guidance, such as historical prices.
  • Association of veterinaries: In its decision of 15 April 2008, the BCA concluded that the recommended prices that the Association of veterinaries published did not impose a fixed price on its members, mainly because the prices were not incorporated in any ethical or deontological system to which the members had to adhere, subject to disciplinary sanctions.

Maximum price setting is allowed. However, as stated by the BCA in the following case, it must not lead to indirect price fixing:

  • Belgian Professional Association for University specialist in orthodontics and the Christian Health Insurance Fund (“CM”): In a decision of 10 January 2010, the BCA concluded that the additional insurance for orthodontics offered by the CM, whereby maximum prices were imposed, resulted in a prima facie impediment of competition on the Belgian market for orthodontics. In particular, in its contracts with orthodontists, the CM stipulated that clients would not receive additional coverage if the orthodontists would set their prices above a certain amount. This resulted in the imposition of a fixed price. Still, the BCA did not impose fines, as the cumulative grounds for imposing provisional measures were not proven.

Minimum price setting is strictly forbidden. Belgium Competition Law, in line with EU Competition Law, considers this practice as one of the most severe infringements. Even if a rebuttal is possible in theory, no undertaking succeeded yet in demonstrating the competitive advantages of such a behaviour. Examples of the BCA’s stance on minimum price setting can be seen in its recent decisions in the Yeast Producer, Infrared Cabins Case, Order of Pharmacists and Caudalie cases:

 

  • The Yeast producer Case: In a decision of 22 March 2017, the BCA imposed a fine of € 5,489,000 on the leading yeast producer Algist Bruggeman (“AB”) and its parent companies for several competition law infringements, amongst which RPM. In particular, AB imposed fixed minimum retail prices on its distributors for the sale of compressed fresh bakers’ yeast to artisanal and semi-artisanal bakeries. Deviation in the form of a discount to individual clients was only possible by AB’s prior approval. The infringement was considered a clear practice of fixing minimum resale prices reducing intra-brand competition.
  • The Infrared Cabins Case: On 24 January 2019, the BCA imposed a fine of € 98,000 on HM Products Benelux (“HM”), importing and distributing infrared cabins of the Healthmate® brand in the Benelux territory. HM had fixed the maximum level of discounts which its distributors were allowed to grant to their own customers. It also monitored the prices charged by its distributors and threatened to sanction (and possibly sanctioned) distributors not respecting the imposed maximum level of discounts. The fine was modest as the BCA decreased the amount of the fine because it exceeded the statutory maximum of 10% of HM’s Belgian turnover and because the BCA took into account the fact that HM is only a small independent market player not belonging to a large international group. The BCA further reduced the fine by 10% as HM agreed to settle the case. It should be noted that in the meantime the Belgian competition laws have been modified allowing the BCA to impose fines up to 10 % of the worldwide turnover of the undertakings concerned (instead of up to 10 % of their Belgian turnover).
  • Order of Pharmacists case: On 2 May 2019, the BCA imposed a fine of € 1,000,000 on the Order of Pharmacists for developing a general strategy aiming to indirectly impose a minimum sales price on MediCare-Market and evict MediCare-Market or any current or potential competitor developing a business model based on price competition from the market. The BCA found that some provisions of the Order’s code of ethics had the effect of restricting or even eliminating any possibility of advertising for parapharmacy products, and in particular discounts offered on these products, which prevented the development of price competition on parapharmacy products both between pharmacies and between pharmacies and parapharmacies to the benefit of consumers. The fine was reduced to € 245,000 after the Brussels Markets Court found that the BCA had miscalculated the fine based on the turnover of the individual member-pharmacies of the Order of Pharmacists instead of the turnover of the Order itself.
  • Caudalie: On 6 May 2021, the BCA imposed a fine of €859,310 on three undertakings of the Caudalie group for among others the imposition of minimum prices through the fixing of the maximum percentage of rebates that Caudalie’s distributors were allowed to apply to the Caudalie-recommended resale prices to consumers. While the terms of Caudalie’s distribution contracts allowed the selective distributors to freely set their retail prices, the BCA’s investigation showed that Caudalie required its distributors to apply a maximum percentage of discount on the recommended prices. When selective distributors applied higher rebates, Caudalie would call them to order and even imposed penalties upon them if those distributors refused to change their prices after such a call to order. Caudalie offered commitments, which were considered as mitigating circumstances to reduce the fine imposed. The Brussels Court of Appeal later annulled the fine, considering that the BCA could not both accept commitments and impose a fine.