Bundeskartellamt imposes fine against drugstore chain Rossmann for violating the ban on sales below cost price

The Bundeskartellamt has imposed fines totalling 300,000 euros against the drugstore chain Rossmann. According to the Bundeskartellamt’s findings, in 2005 Rossmann sold drugstore products from various manufacturers below its cost price. This pricing policy was applied to 55 products that were sold in a total of 250 cases at prices that were in some cases clearly below the cost price. Such a pricing policy is prohibited under Section 20 (4) of the ARC and constitutes an administrative offence.

The proceedings were unusually complex because they required extensive investigations at Rossmann and its suppliers to determine the cost price of the 55 products. To determine the cost price, not only the charged net price had to be taken into account but also all relevant purchase conditions that were agreed between Rossmann and its suppliers. Accordingly, all conditions – including contributions to advertising costs and other lump-sum payments- had to be included in the calculation of the cost price of each product on a pro rata basis of the turnover achieved with it.

Mr Böge: „Low prices and intensive price competition are welcome features of a market economy. Systematically selling below cost prices, however, leads to the elimination from the market of small and medium-sized companies that are competitive but are not financially able to cope with such an unjustified strategy. Since the elimination of competitors raises concentration levels, this gives the remaining companies scope for action that allows for subsequent price rises to the detriment of the consumers. Competitive pressure on the quality of services would also be reduced.”

Mr Böge continued: „As in previous proceedings on account of sales below cost prices, the proceedings against Rossmann have proved that the existing provisions are sufficient to enable the Bundeskartellamt to effectively counter such predatory practices. A tightening of the provisions is not necessary, would restrict fair competition on the merits, possibly even to the detriment of the consumers, and, since it would probably result in a vast number of complaints, would not be feasible due to the Bundeskartellamt’s limited human resources.”

The decision is not yet final. The person and the company concerned can appeal against the decision to the Düsseldorf Higher Regional Court.