Vertical resale price maintenance in the food retail sector – Majority of fine proceedings concluded

The Bundeskartellamt has concluded most of its cartel proceedings against manufacturers and retailers in the food sector for illegally maintaining the retail prices of well-known brand products in the following categories: confectionary, coffee, pet food, beer and body care products. In these proceedings the authority has so far imposed fines totalling approx. 151.6 million euros on seven retailers and four brand manufacturers. All the fines were imposed on the basis of a negotiated agreement, i.e. a settlement reached between the authority and the parties concerned. Most of the fines are final. The investigations involving the product categories pet food and body care products are herewith concluded. The remaining proceedings against several companies or company groups relating to the product categories confectionary, coffee and beer will be concluded in the coming months. The so-called "vertical case" proceedings began with dawn raids at 15 sites in January 2010 on account of information gained in horizontal cartel proceedings involving the product categories coffee and confectionary.

Andreas Mundt, President of the Bundeskartellamt: "In the food retail sector, as in every other sector, retailers and manufacturers should generally not conclude agreements on shop prices to the detriment of end consumers. Manufacturers should not pressurize retailers or give them monetary incentives to maintain certain retail prices. Due to the large number of companies and business relations we had to examine in this case we focused on specific product categories and practices in our investigations. Ultimately we only punished those practices which constitute a clear restraint of competition and an explicit violation of competition law".

On the retailer side fines have been imposed so far in the vertical case on the following companies:

for agreements with three manufacturers in two different product categories:

-    EDEKA Zentrale AG & Co. KG and EDEKA Zentralhandelsgesellschaft mbH and

-    REWE Zentral-Aktiengesellschaft, REWE-ZENTRALFINANZ eG,

for agreements with three manufacturers in three different product categories:

-    Kaufland Stiftung & Co. KG and Kaufland Warenhandel GmbH & Co. KG,

for agreements with two manufacturers in two different product categories:

-    Metro Dienstleistungs-Holding GmbH, as the indirect legal successor of MGB Metro Group Buying GmbH,

and for agreements with one manufacturer in one product group:

-    Aldi Einkauf GmbH Co. oHG, Essen and Aldi Einkauf GmbH & Co. oHG, Mülheim,

-    Fressnapf Tiernahrungs GmbH and

-    "Das Futterhaus" Franchise GmbH & Co. KG.

On the brand manufacturers' side the following companies received a fine:

-    Edmund Münster GmbH & Co. KG as the indirect legal successor of Haribo GmbH & Co. KG alt,

-    Johnson & Johnson GmbH,

-    Alfred Ritter GmbH & Co. KG and

-    Dr. Kurt Wolff GmbH & Co. KG.

With its decisions the Bundeskartellamt has addressed practices in the food retail sector which constitute illegal resale price maintenance. These included influencing the setting of shop prices by the exertion of pressure by one of the contracting parties or granting monetary incentives as well as the coordination of retailer prices under the moderation of a manufacturer. In the cases fined these practices did not fulfil the conditions for an individual exemption. However, the case constellations and also the actions of the individual companies greatly varied in their severity. This led to substantial differences in the individual amount of fine imposed on the companies concerned.

A particular characteristic of these proceedings is that apart from the manufacturers, retail companies representing the side bound to the agreement played a distinct role in the infringements. This role went as far as urging manufacturers to persuade other retailers to observe a standard shop price level. Only in one case was this limited to giving in to the manufacturer's constant urging.

A number of companies or company groups cooperated with the authority at different early stages of the proceedings and with differing degrees of intensity. This was honoured by the Bundeskartellamt which granted them either immunity from or a reduction of their fines. Immunity was granted to the manufacturers InBev Deutschland Vertriebs GmbH & Co. KG, Mars GmbH and Melitta Europa GmbH & Co. KG and, in two product categories, REWE. The manufacturers Haribo and Johnson & Johnson and, in two other product categories, the retailer REWE received a reduction of their fines. Other manufacturers also cooperated with the authority in uncovering other resale price maintenance systems, which were not taken up further to avoid extending the scope of the proceedings.

Another mitigating factor in the calculation of the fines was that the fines were imposed on the basis of a negotiated agreement (settlement).

Proceedings against the individuals responsible were discontinued for reasons of expediency.

No fines were imposed in the baby food product category, which was also included in the investigations, partly because the initial suspicion could not be confirmed, partly for discretionary reasons.

In those cases where the orders imposing the fines are not yet final, they can be appealed to the Düsseldorf Higher Regional Court.

Further information on the infringements can be found in the respective case summaries confectionary 1, confectionary 2 and coffee, (available in Germany only) on the Bundeskartellamt's website.