Fine imposed on the company REWE for not fulfilling commitments was confirmed

The Chairman of the Office for the Protection of Competition (“the Office”), Mr. Petr Rafaj, dismissed the appeal of the company REWE Zentralfinanz eG against the first instance decision issued in January 2013 by which the fine 23.89 million CZK was imposed on this undertaking for not fulfilling commitments agreed in a REWE/Plus Discount merger case.

 

In 2008, the Office assessed the concentration of undertakings REWE and PLUS-DISCOUNT. In course of the administrative proceeding, the Office found out that this transaction which merged retail chains Billa and Penny Market with PLUS stores could distort competition in several local markets. In response to these findings, REWE proposed the commitments in the form of the sale of four stores in the regions concerned. After the assessment of the proposed commitments, the Office concluded that they are sufficient to eliminate the competitions concerns and cleared the merger, subject to the proposed commitments.

The sale of four stores should have taken part within one year after the decision had been issued, however REWE several times applied for a postponement of the deadline for the implementation of commitments and their reassessment. The Office partially adjusted the commitments, however neither these were implemented. At the end of 2010, the administrative proceeding for non-compliance with the imposed commitments was initiated.

In course of the administrative proceeding, the Office thoroughly investigated the activities of REWE related to its efforts to fulfil the commitments. In January 2013, the Office issued first instance decision in which it concluded that REWE had not made sufficient efforts to their implementation. The obligation laid down in the decision on REWE/PLUS-DISCOUNT merger was therefore not fulfilled. The Office imposed for aforementioned infringement of competition law the administrative fine of 24 million CZK. In calculating the fine, the Office took into account the turnover of the undertaking in regions concerned.

REWE filed an appeal against the decision to the Chairman of the Office. The party sought to disprove conclusions made in the first instance, especially the conclusion about its insufficient efforts aimed to fulfilling the commitments, not approaching all potential buyers of stores concerned and also the incorrect legal assessment carried out by the Office and the disproportionate amount of the fine. The Chairman of the Office rejected these objections and stated that REWE must have been aware of not fulfilling the commitments imposed by the decision of the Office and thus seriously infringed competition law.

International and External Relations Department