The Office for the Protection of Competition (the Czech Competition Authority or the “CCA”) kept busy even during the summer as it imposed three fines for resale price maintenance (“RPM”) in the pet food and pet supplies sector. All three companies monitored the compliance of the sellers with their recommended prices and requested them to increase their prices to the level set by them if the prices dropped. Their buyers usually complied with these requests.
The first fine was imposed on company TENESCO. The CZK 307,000 (approx. EUR 12,790) fine is at first glance remarkably low in contrast with the CCA’s previous RPM cases. This is due not only to the low annual turnover of TENESCO, but also to the 65 % reduction which the CCA applied because TENESCO voluntarily ceased the anticompetitive practice immediately after the dawn raid by the CCA and it cooperated exceptionally with the CCA during the administrative proceeding. Finally, the CCA also took into account the fact that TENESCO introduced a new competition compliance programme. Moreover, the CCA reduced the fine by a further 20 % because the company agreed to settle the case, thus saving the CCA some of its procedural capacity.
EUROBEN was fined somewhat more at CZK 1.07 million (approx. EUR 44.416) due to it having higher turnover.
In the case of NOVIKO, fine of CZK 47.80 million (approx. EUR 1.96 million) was imposed. Unlike the TENESCO and EUROBEN case, fine imposed on NOVIKO ranks among the highest fines ever imposed for RPM by the CCA. Even though the CCA took into account a number of circumstances, including strengthening of the existing competition compliance programme, to reduce the fine here as well, it also considered the fact that NOVIKO had applied sanctions against its purchasers for non-compliance with its recommended prices/requests for price adjustment in several cases as an aggravating circumstance.
It is evident that RPM cases are still high on the CCA’s priority list. In fact, it is the most frequently sanctioned anticompetitive practice for which the highest fines are imposed in relative (not nominal) terms (even at the cap of 10% of the undertaking’s total annual turnover). There is no indication that the CCA’s priorities will change any time soon. Therefore, RPM will probably remain in the centre of competition law enforcement in Czechia for years to come.
From a substantive perspective, these cases from the pet food sector do not differ much from the long list of previous RPM cases we have reported. They were all settled with (relatively) high fines which were then reduced by making use of institutes designed to motivate undertakings to cooperate with the CCA rather than fight it and/or take it to the court.
Again, judicial overview of the CCA’s decisional practice was sadly avoided altogether leaving the CCA free to continue to apply its somewhat controversial approach to the standard of proof in RPM cases.
The article was also published on the platform Distribution Law Centre, which we are part of.