1. The Investigation of the Austrian Retail Sector: Vertical Price Restraints and their Horizontal Aspects Dr. Anastasios Xeniadis Dr. Luca Schicho Austrian Federal Competition Authority 5th Competition Forum of Ukraine Kiev, 18th March 2016

2. Overview I.Introduction II.The Austrian food retail investigation III.The Austrian electronics and online sales investigation IV.Conclusion

3. I. Introduction The prohibition of RPM Resale Price Maintainance (RPM) is an agreement or concerted practice with the direct or indirect object of establishing a fixed or minimum resale price or a fixed or minimum price level to be observed by the buyer RPM is considered a “hardcore restriction” in European Competition Law, which is unlikely to be justifiable RPM cases are currently under investigation in virtually all Member States and by the European Commission, recent investigations include Germany (150 Mio in the food retail sector), Belgium (175 Mio in the personal care sector – pursued as a hub and spoke case)

4. I. Introduction Harmful effects of RPM RPM eliminates intra-brand price competition and facilitates collusion at the distribution level RPM undermines the incentive for the supplier to cut its price to its distributors, as the fixed resale price will prevent it from benefiting from expanded sales Manufacturers with market power may use RPM to foreclose smaller rivals, by granting superior margins to distributors Distributors with market power may use RPM to prevent more efficient rivals from entering the market or acquiring sufficient scale with low prices

5. I. Introduction Indirect forms of RPM fixing the maximum level of discount the distributor can grant from a prescribed price level making the grant of rebates or reimbursement of promotional costs by the supplier subject to the observance of a given price level linking the prescribed resale price to the resale prices of competitors, threats, intimidation, warnings, penalties, delay or suspension of deliveries or contract terminations in relation to observance of a given price level Price monitoring systems

6. II. The Austrian food retail investigation In August 2011, FCA received evidence of RPM with strong horizontal elements during an investigation 25 inspections regarding RPM in Food Sector since then Fines against 5 food retailers, including :  REWE (35% MS): € 20,8 Mio (numerous products)  SPAR (30% MS): € 30 Mio (dairy products); further case pending (including beer and non-alcoholic beverages)  Fines against 4 small retailers amounting to € 1,2 Mio  Fines against 13 suppliers amounting to € 4 Mio

7. II. The Austrian food retail investigation Cases involved numerous different types of behaviours: "Classical" written RPM clauses in annual agreements and correspondence on promotional sales Retailers requiring to ensure that identical or similar contemporaneous resale price increases are implemented by competing retailers (conditional for increase of purchase price) Suppliers communicating in advance time and extent of resale price increases of other retailers Suppliers monitoring and reporting to retailers on competitor's price increases Retailers exercising pressure on suppliers failing to implement identical or similar resale prices with competing retailers

8. III. The Austrian electronics and online sales investigation In November 2011, the Vienna University of Economics published a study concluding that 47,2% of online traders in the electronic industry felt pressure from the industry considering their price setting (based on information provided anonymously) FCA investigated and contacted selected retailers but retailers were not willing to provide any written information In Autumn 2012, two inspection orders were issued for inspections at the premises of a producer The inspections enabled the FCA to request numerous follow-on inspections throughout the industry (including retailers) Fines against 10 companies, amount to € 6,3 Mio

9. III. The Austrian electronics and online sales investigation Cases involved numerous different types of behaviours: "Classical" written RPM clauses Suppliers imposing penalties or rewards related to compliance with RPM, including delays in supply and refusals to supply Suppliers imposing maximum discounts for promotion activities Suppliers banning online sales for certain goods or on specific (price aggressive) online plattforms Suppliers communicating in advance time and extent of resale price increases of other retailers

10. IV. Conclusion RPM entails signficant harm to competition directly affecting consumers through higher prices RPM is often „traditional“ and long-established in certain sectors and considered „natural“ by many companies involved, resulting in increased opposition to enforcement, but also easier availability of evidence RPM investigations are ressource-intensive, as they typically involve a very large number of companies, but they provide important benefits to consumers and reduce entry barriers for new market participants

11. Overview of Austrian vertical cases KTM Fahrrad GmbH112.0002015 United Navigation GmbH100.0002015 Samsung Electronics Austria GmbH1.050.0002015 Spar Österreich-Gruppe30.000.0002015 Nikon GmbH (Zweigniederlassung Wien)170.0002015 Pago International GmbH152.4602015 Pfeiffer HandelsgmbH und die Zielpunkt GmbH562.5002015 Vöslauer Mineralwasser AG653.7752015 Brauerei Joseph Baumgartner GmbH56.2502014 NÖM AG583.2002014 MPREIS Warenvertriebs GmbH225.0002014 Sutterlüty Handels GmbH78.7502014 Austrotherm GmbH187.5002014 Stieglbrauerei zu Salzburg GmbH196.8752014 Grundig Intermedia GmbH372.0002014 Brauerei Hirt Gesellschaft mbH58.5002014 SSA Fluidra50.0002014 AFS Franchise-Systeme225.0002014 swisspor Österreich Gmbh & Co KG290.0002014 Braucommune in Freistadt52.5002014 Hans Lurf GmbH100.0002014 Mohrenbrauerei August Huber KG82.5002014 Media-Saturn BeteiligungsgmbH1.230.0002014 Pioneer Electronics Deutschland GmbH350.0002014 Privatbrauerei Zwettl Karl Schwarz Gesellschaft m.b.H.82.5002014 Brauerei Schloss Eggenberg Stöhr GmbH & Co KG57.0002014 Vereinigte Kärntner Brauereien AG195.0002014 Kärntner Milch reg.GenmbH375.0002013 Vorarlberger Mühlen- und Mischfutterwerke GmbH58.5002013 Brauerei Ried e.Gen.52.5002013 Emmi Österreich GmbH210.0002013 bauMax AG90.0002013 REWE International20.800.0002013 Philips Austria GmbH (Consumer Lifestyle)2.900.0002013 Berglandmilch eGen1.125.0002013 Steinbacher Dämmstoff GmbH600.0002013 Bauhaus Depot GmbH100.0002012 Hornbach Baumarkt GmbH100.0002012 OBI Bau- und Heimwerkermärkte235.0002012 Overall63.919.310

12. Thank you for your attention! Austrian Competition Authority www.bwb.gv.at anastasios.xeniadis@bwb.gv.at luca.schicho@bwb.gv.at