The French competition authority fined Darty, Boulanger and ten household appliance manufacturers €611 million for implementing anti-competitive practices to the detriment of consumers.
As the 2010s approached, while online commerce was gradually winning the hearts of consumers, some traditional stores began to fear for their turnover and to view this new competition unfavorably. Also, several household appliance manufacturers (BSH, Electrolux, Whirlpool-Indesit, LG, Miele, SEB, Smeg, Candy Hoover, Eberhardt) as well as two large distributors (Darty and Boulanger) have implemented various strategies to maintain their margins. and limit competition. In particular, they had agreed on the prices of certain products and had put in place an elaborate monitoring system for distributors.
Also, on December 19, the French Competition Authority sentenced these twelve companies in the household appliances sector to a fine of 611 million euros. As the authority indicates in its press release, these practices were “particularly serious insofar as they were institutionalized, implemented in secret and concerned a large part of the players present on this market”. Consequence for consumers: the prices of certain products have been kept artificially upward, preventing them from “to benefit from more attractive prices for the purchase of their small and large household appliance products”.
Anti-competitive practices: agreements and pressure on distributors
The facts took place between 2007 and 2014 and follow a first conviction of 189 million euros in 2018 for similar facts. The twelve companies agreed on the price of certain large household appliances (dishwasher, dryer, refrigerator, freezer, stove, microwave, hob, etc.) and small household appliances (vacuum cleaner, iron , food processor, kettle, coffee maker, epilator, etc.).
“Manufacturers and their 'traditional' distributors (selling mainly in stores) thus wanted to limit the emergence of websites which marketed household appliances at 'cut-off' prices, while guaranteeing high margins to distributors active on traditional distribution channels , especially in stores”explains the Authority.
Everything had been carefully planned. Manufacturers communicated retail prices to distributors and monitored their correct application. Online distributors who refused to comply with these price guidelines were punished by discriminatory measures, such as delivery delays, supply interruptions or the implementation of selective distribution systems. In addition, certain products should not be sold on the Internet, in order to favor physical points of sale and historical distributors, again always to the detriment of new online sites.
According to the Competition Authority, these agreements were negotiated via “a coded language to hide price instructions”. For example, companies mentioned “recommended prices” which were in fact prices to be respected. They subjected distributors to constant pressure to respect them through innuendoes: “if you want to receive the product, you know what to do”; “There’s a new product that’s just been released, if you want it…”. To avoid confusion, manufacturers avoided telephone and email, favoring physical meetings.
These code exchanges proved, according to the Competition Authority, that these practices were institutionalized. Ultimately, online distributors, who offered more competitive prices, saw themselves excluded or limited in their activities, in particular by bans on marketing certain references.
Anti-competitive practices: a particularly steep fine
Race results: “these practices have eliminated intra-brand competition, preventing consumers from benefiting from more attractive prices for the purchase of their small and large household appliance products”regrets the authority. Worse still, these measures strengthened the position of Darty and Boulanger as distributors. According to the estimates of a distributor interviewed as part of the investigation “the vast majority (around 95%) of distributors present online at the start of the practice have disappeared or have been bought by traditional distributors.” As for the consumer, he could not benefit from the most attractive prices.
For all these infractions and grievances, the Competition Authority ordered the twelve companies to pay fines totaling 611 million euros. The heaviest goes to SEB, which will have to pay 189.5 million euros, while the distributors will pay 89.35 million euros for Boulanger, and 109 million euros for Darty. The authority considers in fact that the latter, “by their weight, could have been able to put an end to anti-competitive practices”. Of the twelve companies targeted, ten chose not to contest the sentences. On the other hand, SEB and Boulanger indicated that they wanted to appeal to the Paris Court of Appeal.
