German cosmetics company fined for price fixing
The competition protection body imposed the €6.5m charges after the German firm’s practice of putting pressure on retailers allegedly led to artificially inflated prices for their “Dr Hauschka” skin care brand.
WALA is also accused of distorting prices by only distributing products through selected retail outlets.
Andreas Mundt, President of the Bundeskartellamt, noted: “WALA systematically based its distribution system on the strict adherence to stipulated end consumer prices and put pressure on retailers to prevent them from undercutting prices recommended by the manufacturer.”
The investigation
The Bundeskartellamt investigation was triggered by complaints from retailers and end consumers in 2009.
The body allegedly discovered that WALA had been forcing retailers to adhere to its price recommendations since at least 2003.
WALA is accused of restricting internet selling and checking that shops retailing their product adhered to the recommended prices, with cosmetics supplies being cut off or threatened to be cut off if they refused.
In 2007, WALA introduced a distribution system which only included selected retailers, with the conclusion and terms of the contract dependent on distributers adhering to fixed prices.
The company is also accused of engaging in illegal agreements with specialized retailers to fix end consumer prices.
WALA respond
Inka Bihler-Schwarz, a PR representative from WALA, said that the events were a result of a “misunderstanding” in which WALA had failed to communicate the none-binding nature of its pricing agreements explicitly.
Bihler-Schwarz also said that in order to ensure expert advice at the point of sale: ”our distribution partners are selected according to very specific quality criteria. This ultimately led to a selective sales approach with an authorized retailer contract in 2007.”
“Needless to say, at no point did the authorized retailer contract require the recommended sales prices to be adhered to,” they added.
The settlement
As part of the settlement, WALA has agreed not to formulate its contracts in a way that can be used to fix prices, to treat retailers equally and not to restrict internet sales. However, the company has stated that it intends to continue using a selective sales approach.
A statement from the regulatory body notes: “In the Bundeskartellamt's view, selective distribution systems can only make use of the advantages of a preferential treatment under competition law as long as they do not impede competition.”
WALA have said that they do not intend to appeal against the decision at the Düsseldorf Higher Regional Court.
