Resale Price Maintenance (RPM) in Sweden
RPM is rarely dealt with by the Swedish Competition Authority (the SCA). Only a few cases concerning RPM have been opened since the 1990s and most cases never reach the Swedish Patent and Market Court as the SCA often decides to accept commitments from the investigated company, often under penalty of a fine. Furthermore, the SCA has not issued any guidance or report on this topic since 2001, when it published a report on RPM on recommended prices (SCA report series 2001:6). However, it can be noted that the SCA has declared the need for further investigations on alleged RPM cases due to the continuous digitalization in many industries. The SCA is keen to assure that the positive effects of the digitalization are not put out of play (SCA report series 2018:1).
Maximum price setting is allowed provided it does not lead to indirectly fixing prices. Minimum price setting, however, is strictly forbidden.
- Decision by the SCA, 339/2015 (The Toilet Seat Case): The SCA investigated a suspected case of minimum price setting on a certain ceramic toilet seat. The toilet seat was the most sold on the Swedish market. The manufacturer, Ifö Sanitär AB, contacted certain resellers with an expressed wish of a certain minimum price to be set towards consumers. Some retailers adhered to the requested minimum price. The SCA concluded that the market structure and the involved actors indicated that RPM could have a negative effect on the market. Further, the SCA concluded that since the manufacturer didn´t have any direct relationship with the resellers, the scope was limited for justified price discussions between the parties. However, the SCA dismissed the case since it was not established that the discussions between the parties expressed their joint intention to conduct themselves on the market in a specific way and thus, according to the authority, no “agreement” existed between the parties. Also, the information shared by the manufacturer was not considered specific enough to vacate strategic uncertainty on the market.
- Decision by the SCA, 59/2019 (The Markslöjd AB Case): The leading lighting company Markslöjd AB had blocked a retailer from receiving delivery of orders, and from placing new orders, until the retailer increased its retail prices for Markslöjd’s products. The retailer eventually increased its retail prices to comply with the requests from Markslöjd. The SCA concluded that the actions undertaken by the parties meant that there existed an agreement between them that restricted the retailer’s ability to decide its retail prices. The SCA issued Markslöjd with a fine of four per cent of Markslöjd’s annual turnover for domestic lighting products, which was accepted by Markslöjd.
- Decision by the SCA, 156/2021 (The Carl Hansen & Søn Møbelfabrik A/S Case): The SCA investigated if Carl Hansen & Søn Møbelfabrik A/S was acting to control the retail prices of its products, by repeatedly specifying retail prices in its communication with retailers. The SCA reiterated that setting fixed, or minimum prices limits competition. The SCA
decided not to pursue the matter due to shortage of evidence and undertakings from the company.
Recommended/approximate pricing: Most Swedish case law on RPM concerns recommended pricing. It is not forbidden to set recommended or approximate prices per se, provided it does not result in adherence to a large extent. For example, there have been cases where the producer were allowed pre-printed prices on products, shelf labels etc. As seen in the following cases, a decisive factor is whether the recommended prices are in fact adhered to or if changing the prices involve too much effort:
- Decision by the SCA, 402/2010 (The Make Up Store Case): Make Up Store offered its franchisees to use a certain checkout system, which many of the franchisees accepted. The checkout system contained i.a. central information on products, order processing, purchase prices, and resale prices. Resale prices in the checkout system could only be changed by Make Up Store and could not be adjusted to single franchise stores. By changing prices on products of its choice, Make Up Store arranged sales twice a year. Make Up Store also supplied its franchisees with shelf labels and product lists, which contained preprinted prices. Although the franchisees were free to set other prices than those set by Make Up Store in the checkout system or on shelf labels, most franchisees were found to follow Make Up Store’s directions. Make Up Store committed to change its routines for the checkout system and shelf labels as well as clarify that its prices were not more than recommendations. Make Up Store’s commitments were accepted under penalty of a fine of SEK 750,000.
- Decision by the SCA, 994/2004 (Reitan): A case similar to the aforementioned Make Up Store Case. Reitan applied a checkout system for its franchisees that contained recommended maximum prices. Only Reitan had access to change prices in the system. The franchisees were allowed to freely change prices on the products, but deviating from Reitan’s pricing meant not being able to use scanning or short commands when selling the products. The franchisees were noted to adhere to Reitan’s pricing. Also, the prices set by Reitan were basis for the franchise fee, thus less incentive to lower the prices. Reitan made a commitment to the SCA to make several changes regarding its checkout system and demands on its franchisees.
- Swedish Market Court, MD 2002:5 (The Månadens Bok Case): A trade organization for resellers of books etc. brought an action against the publisher Månadens Bok (eng. Book of the Month) for issuing paperbacks on which an approx. price was printed on the back of each book. Månadens Bok argued that the approx. price was not binding for resellers of the books and had as its purpose to keep prices low on the books concerned. The Market Court found that although the preprinted prices were not binding, a reseller who wanted to sell the books to another price had to put new price marks on each book, which involved more work. Also, the preprinted approx. prices were found to result in price rigidity at the resell level. The Market Court concluded that the approx. prices meant a control of both resellers’ sales margins and their pricing of the books. Under penalty of a fine of SEK 500,000, Månadens Bok was required not to preprint prices of any kind on its books.