Pet Food Supplier VAFO Has to Pay CZK 120 million for Prohibited Resale Price Fixing

The Office for the Protection of Competition (hereinafter referred to as “the Office”) imposed a fine of CZK 120,121,000 on the undertaking VAFO PRAHA (hereinafter referred to as "VAFO") for the conclusion and implementation of prohibited vertical agreements on price fixing in the sector of pet food supply. The decision is now final, as the undertaking admitted its illegal conduct and did not file an appeal against the decision. Therefore, the penalty was reduced in the course of the settlement procedure.

The undertaking VAFO is active in the sector of production and distribution of several well-known brands of pet food, mainly for dogs and cats. It supplies pet food to wholesale distributors, retail pet food chains, online stores, individual pet shops, kennels, etc. VAFO also operates to a limited extent at the retail level.

According to the Office's findings, from January 2013 to September 2021, the undertaking VAFO forced its customers to comply with its price level when selling pet food to end consumers. At the same time, VAFO´s customers were not allowed to provide consumers with higher discounts. VAFO monitored compliance with those prices and sellers who sold the pet food for lower prices were requested to increase their prices to the set level. In doing so, VAFO threatened the sellers with penalties, which VAFO actually applied in case of non-compliance.

The Office detected and proved prohibited agreements distorting competition in the markets of pet food in the Czech Republic concluded with nearly 30 customers of VAFO. The conduct in question constituted an infringement of the Czech Competition Act and also EU competition law.

The fine could have been considerably higher; however, the Office took into account the undertaking´s cooperation, in particular with the Office in the course of the so-called quasi leniency, as well as the voluntary termination of the anti-competitive conduct before the initiation of the administrative proceedings, informing customers that they may freely determine the selling price and the adoption of a competition compliance programme. As mentioned above, VAFO has also complied with the conditions for the application of settlement procedure.

Every second household in the Czech Republic has a dog or cat. Agreements on resale price maintenance clearly have a negative impact on the price paid for pet food by end consumers. This is the fifth case of this type of prohibited agreements recently detected by the Office in such market (Dibaq, Noviko, Tenesco and Euroben represent other offenders). It may therefore be stated that the whole sector is affected by such anti-competitive behaviour and its negative impact is therefore more serious as price competition is restricted for more brands. Moreover, VAFO represents a significant player in the market.

Press Unit of the Office for the Protection of Competition
24/175 - S0480/2022