Fine imposed on WALA Heilmittel GmbH for vertical price fixing practices involving Dr Hauschka cosmetics products

Today the Bundeskartellamt has imposed fines amounting to a total of approx. € 6.5 million on WALA Heilmittel GmbH, Bad Boll, and representatives of the company on account of vertical price fixing practices. The company is accused of having put pressure on retailers for years, obliging them to comply with WALA's recommended prices for its natural cosmetics products sold under the brand name "Dr. Hauschka".

Andreas Mundt, President of the Bundeskartellamt: "WALA systematically based its distribution system on the strict adherence to stipulated end consumer prices and put pressure on retailers to prevent them from undercutting prices recommended by the manufacturer. In contrast to a merely non-binding price recommendation, such price fixing practices are prohibited as they restrict competition between retailers and lead to artificially increased product prices. WALA's system of distributing products through selected retail outlets also helped to enforce the company's vertical price fixing practices."

WALA products are mainly sold in pharmacies, perfumeries, beauty salons, department stores and organic supermarkets. Following up on numerous complaints by retailers and end consumers the Bundeskartellamt searched the company's offices in summer 2009.

The investigations have shown that, at least since 2003, WALA has been using different methods to enforce adherence to its price recommendations for Dr. Hauschka products. WALA's sales representatives regularly checked on the outlets' sales prices and, if the recommended prices were undercut, WALA threatened to refuse to supply its products or actually stopped supplying the outlets. In summer 2007, WALA introduced a selective distribution system which only included selected retailers ("depot contract"). The conclusion and term of the depot contract were made subject to the retailers' adherence to the recommended prices. The contracts also included clauses restricting internet sales which further supported the enforcement of the vertical price fixing practices. Furthermore, the investigation uncovered evidence that WALA had engaged in illegal agreements on end consumer prices for Dr. Hauschka products with several specialised retailers which are active throughout Germany.

A settlement agreement was reached with WALA and its representatives involved. The company has undertaken to formulate its future depot contracts in such a way as to ensure that the contracts cannot be used to fix prices, retailers will be treated equally and internet sales will not be restricted. Depending on their design the new contracts could again be subject to examination under competition law.

In the Bundeskartellamt's view, selective distribution systems can only make use of the advantages of a preferential treatment under competition law as long as they do not impede competition.

The fine imposed within the framework of the settlement agreement takes into account the decision of the Federal Court of Justice in the cement cartel case (cf. press release of 10 April 2013) and the new Guidelines of the Bundeskartellamt on the setting of fines (cf. press release of 25 June 2013), which has resulted in a reduction of the fine.

The decision of the Bundeskartellamt can be appealed against to the Düsseldorf Higher Regional Court.