A typical price fixing agreement usually takes the form of a cartel, that is, a price fixing agreement between competitors. Pricing is also prohibited for companies in a vertical relationship (active at different levels of the supply chain, such as a manufacturer and a retailer).
In a vertical relationship, the practice is known as retail price maintenance (‘RPM‘). A manufacturer or supplier is prohibited from restricting a retailer’s ability to determine its own resale price, for example by imposing minimum or fixed prices. The EU Vertical Restraint Block Exemption Regulation classifies this restriction as hardcore.
EU competition law prohibits direct and indirect forms of RPM. Examples of indirect forms of RPM include setting margins, setting a maximum discount, requiring retailers to obtain manufacturers’ consent to revise their prices, intimidation, use of lobbying price notification and monitoring systems. on retailers to deter discounts, warnings and the like. It is important to note that EU competition law allows recommended and maximum resale prices (the latter serve as a price cap, thereby benefiting consumers).
There are two examples of recent enforcement actions relating to the RMP. In July 2018, the Commission imposed a fine four consumer electronics companies â¬ 111 million in July 2018. The companies reportedly blocked online retailers from deciding the price of their products using pricing algorithms. The Commission also imposed a fine on a fashion maker 40 million euros in December 2018, which, among other unfair practices, had forced retailers to independently decide the price of Guess products.