Resale Price Maintenance (RPM) in The Netherlands
At the moment, RPM is not considered a hot topic in the Netherlands, in the sense that it has not led to a lot of Dutch case law, nor investigations by the Dutch competition authority (‘ACM’) over the last few years. RPM is not mentioned specifically on ACM’s agenda for 2018 and 2019. The agenda contains four ‘sectors’ which are key priorities these two years, which
are the digital economy, green energy, prescription drug prices and ports. It is therefore possible that ACM intervenes if it suspects any infringement of competition law, such as RPM, in these sectors.
Notwithstanding the fact that RPM may not be high on ACM’s agenda, suppliers should nevertheless be aware not to impose fixed or minimum resale prices on their distributors, as RPM is strictly prohibited under the Dutch cartel prohibition (art. 6, par. 1 of the Dutch Competition Act). Distribution agreements which contain illegal RPM clauses are void. Undertakings can invoke or rely on the cartel prohibition vis-à-vis or in in civil proceedings. A peculiar situation with regard to RPM is that of the fixed book prices in the Netherlands, which are actually fixed by a Dutch act (“Wet op de vaste boekenprijs”). This act was introduced in 2005 as replacement of the Dutch ‘book cartel’ and is still in force.
The most important case law concerning RPM – incl. fines.
G-Star/Secon Group: ACM decision 12 January 2000, decision on objection 21 December 2001, and CBb ruling 7 December 2005. ACM’s predecessor fined fashion house Secon, as it imposed RPM on its distributors. The fine amounted to 500,000 Dutch Guilder (+/- EUR 227,000), but was reversed as the CBb ruled that RPM had been established, but that ACM had insufficiently taken into account the factual context, so that it was unable to establish whether there was an appreciable restriction.
Sector scan on indications concerning online sales, 2009. ACM analyzed 131 indications of infringements in the household appliance sector and watches sector. These indications amongst others related to RPM, but in the end there were insufficient grounds to launch an investigation.
Albert Heijn/Peijnenburg: District Court‘s Hertogenbosch 10 February 2005. Supermarket Albert Heijn reduced prices of Peijnenburg shortbread. Peijnenburg responded with a refusal to supply, because AH would have ‘ruined’ the product. According to the Court, Peijnenburg’s refusal to supply was not unlawful nor contrary to competition law, as the reduced price would not be reasonable and fair. ACM seemed not to agree and publicly clarified that it considers that RPM is not allowed under competition law.
Batavus/Vriend’s: Court of Appeal Leeuwarden 9 October 2009, Supreme Court 16 September 2011, Court of Appeal Arnhem-Leeuwarden 22 March 2013. Bicycle manufacturer Batavus was not allowed to unilaterally terminate the distribution greement with retailer Vriend’s, as the Supreme Court found that there was indirect RPM as the termination was connected to the price level used by Vriend’s. The termination constituted an appreciable restriction of competition.
ACM’s policy regarding vertical agreements
In 2015, ACM published the policy document ‘ACM’s strategy and enforcement priorities with regard to vertical agreements’. In this document, ACM underpins that competition may be restricted by vertical agreements, causing harm to consumers. ACM could possibly intervene in such a case. According to ACM’s strategy and enforcement priorities with regard to vertical
restraints, ACM selects cases “in which ACM believes the harm to consumer welfare is the highest.”
With regard to vertical agreements, ACM concludes that i) the effects of vertical agreements on consumer welfare can be both positive and negative, differing from case-to-case, and ii) that vertical agreements, generally speaking and especially in the absence of market power, more often than not benefit consumer welfare. Generally speaking, ACM will thus have to decide on a case-by-case basis whether a vertical agreement has either positive or negative effects, where it is particularly relevant if one of the parties (supplier and/or distributor) has market power.
A short assessment of what would be viewed as illegal RPM and how it is likely to be assessed by ACM in the near future
The Dutch cartel prohibition is interpreted and applied in accordance with the European cartel prohibition, case law of the ECJ and GC and EC’s decisions and guidance documents (such as the EC guidelines on vertical restraints). The Dutch Competition Act also declares the Vertical Block Exemption Regulation applicable to situations where there is no effect on trade between Member States. In its 2015 policy document, ACM outlines how it would assess (alleged illegal) RPM situations:
“First of all, ACM estimates the level to which the market is susceptible to collusion, both at a manufacturer level and a retailer level. Generally speaking, the possibilities of effective collusion are greater if fewer companies are involved, homogeneity of products is greater, and buyer bargaining power is smaller. With regard to the second theory of harm, in addition to the abovementioned factors, the level to which retailers are able to force RPM onto manufacturers is relevant. The reason is that supporting a cartel between retailers is not automatically in the interests of an individual manufacturer. A cartel among retailers increases the product’s end price, reducing demand for the product. If the wholesale price remains constant, the manufacturer’s profit will therefore decrease because of a dealer cartel.
ACM will also estimate the potential efficiency improvements. What is important is that, if RPM produces an efficiency improvement, it can be expected that RPM is applied market-wide. Moreover, these efficiency improvements can also be passed on to consumers. Therefore, the impact of the effect of market-wide RPM (pro-competitive or anti-competitive) can be as ambiguous as the impact of the effect of a single RPM. Nevertheless, it is generally the case that if RPM has a harmful effect in a concrete case, market-wide application thereof amplifies the harm of the RPM.”