The aim of the protection of market competition is primarily to create benefits for consumers and equal conditions for all entrepreneurs on the market, who, acting in accordance with the existing rules and competing on the market with the quality, price and innovation of their products and services, contribute to the overall development of the economy.
Distributor of bicycles – KEINDL SPORT fined € 281,000 for agreed resale price maintenance
In its infringement decision of 20 July 2023, the Croatian Competition Agency (CCA) found that within the meaning of the Croatian Competition Act the distributor of bicycles Keindl sport d.o.o. from Zagreb concluded a prohibited vertical agreement with its distributors in the territory of the Republic of Croatia. In the period from 17 September 2013 to 1 June 2018 this undertaking had set minimum resale prices of CUBE bicycles where the distributors concerned tacitly agreed to implement the unilateral business policy of the undertaking Keindl sport that had as its object resale price maintenance (RPM) of the product concerned and adopted the unilateral conduct in practice.
For this hard core restriction Keindl sport was fined a total of EUR 281,836.88.
The resale price maintenance, in other words, an agreement or concerted practices that have as their direct or indirect object the restriction of the buyer’s ability to determine its sale price, without prejudice to the possibility of the supplier to impose a maximum sale price or recommend a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties, constitutes a hard core restriction.
The CCA found that Keindl sport explicitly imposed on its distributors to apply the resale price listed in the pricelists concerned and the preorder forms delivered to them before each season, with the view to applying the unilateral conduct of Keindl sport that had as its object the resale price maintenance for CUBE bicycles.
In the surprise inspection carried out on the Keindl sport business premises the CCA found evidence on the existence of an agreement between Keindl sport and 15 of its distributors that indirectly set the resale price of CUBE bicycles determining that the discounts for new CUBE bicycles would not be given in the fall/winter season, or that the highest discount for new CUBE bicycles in the season would not exceed the capped 5 per cent. The CCA also found evidence that the distributors concerned actively and directly participated in the unilateral conduct of Keindl sport on the basis of which it set the resale price of CUBA bicycles, where they would disclose or report other members of the distribution network that deviate from the standard pricing level of Keindl sport, the agreement on the absence of discounts or the agreement on maximum discounts applicable on new models of CUBE bicycles in season.
The analyses of the invoices submitted by these 15 distributors for 4,690 CUBE bicycles sold to end customers in the period from 15 September 2013 to 1 May 2018, indicated a concurrence of wills in the adopted unilateral conduct of Keindl sport in the resale price maintenance, in the entire observed period, by setting the retail prices of CUBE bikes in an amount equal to or higher than the retail prices in the price lists and pre-order forms communicated to the distributors by Keindl sport before the start of the new season or when creating wholesale orders in Keindl sport’s B2B web shop during the season and that the distributors adhered to the agreement with Keindl sport not to approve discounts on new models of CUBE bicycles in the season (autumn/winter) or the maximum allowed discount of 5 percent.
Out of the total number of CUBE bikes sold by all the distributors concerned in all model seasons of 2014, 2015, 2016, 2017 and 2018, the CCA found that over 93 percent of these CUBE bikes were covered by the prohibited agreement between Keindl sport and the distributors concerned.
The fine imposed by the decision in question in the amount of EUR 281,836.88 was paid by Keindl Sport into the State Budget of the Republic of Croatia.
It is the view of the CCA that the fine will have a deterrent effect on the undertaking concerned as well as other undertakings from engaging in or continuing behaviour which restricts competition.