The Chairman of the Office Confirmed Fine for Resale Price Maintenance Agreements Imposed on BABY DIREKT

Petr Mlsna, the Chairman of the Office for the Protection of Competition, upheld imposition of a fine amounting to CZK 40,793,000 on BABY DIREKT s.r.o. which entered into prohibited vertical resale price maintenance agreements. On the basis of an appeal, the Chairman of the Office partly changed the contested decision; however these changes do not affect the final amount of the fine.

Petr Mlsna commented on the imposed fine as follows. „This anticompetitive conduct was of a long-term nature negatively influencing not only retailers which were not able to compete on price but it resulted in higher prices of children´s goods having negative impact on families and single parents.”

BABY DIREKT, which is a distributor of children´s goods (mainly strollers, car seats, children’s furniture, vehicles, etc.), between 2011 and 2018 entered into restricted agreements mainly through oral or e-mail communication with its retailers in order to increase sale prices for final consumers to the level of its set minimum retail prices. BABY DIREKT threatened the retailers with penalties for not complying with the minimum fixed prices or even penalized them in the way of non-delivery of goods in case retailers had offered the goods for lower price. Conclusion and implementation of prohibited agreements on the direct resale price maintenance distorted competition in the relevant markets of the sale of strollers, car seats, children’s furniture and vehicles within the territory of the Czech Republic.  By its decision, the Office prohibited the performance of the mentioned agreements and imposed an obligation on BABY DIREKT to inform its retailers that these agreements have been null and void.

The Chairman of the Office within the appeal proceedings stated that the impact on the trade between the Member States of the EU and the infringement of the Treaty on the Functioning of the European Union mentioned in the first-instance decision had not been sufficiently proved.

The Office took into account mainly the long-term nature of the infringement of the Competition Act when imposing the fine, since the anticompetitive conduct lasted for more than 7 years in relation to the majority of its goods. Despite changes made by the Chairman, the fine would be significantly higher than 10% of the turnover, which is maximum level the Office is allowed to impose. Consequently, the imposed fine was decreased amounting to CZK 40,793,000 in order to comply with the Competition Act.

 

Press Unit of the Office
21/003 – R0206/2019