09/05/2018 - THE HELLENIC COMPETITION COMMISSION STRIKES DOWN INDIRECT ATTEMPT AT RPM BY FRENCH CAR MANUFACTURER (EM. PSISPSIKAS & SIA V. MAVA EMPOROVIOMIHANIKI)

The complainant company, Em. Psispsikas & SIA E.E, was previously a RENAULT car distributor and member of the official network of the company, MAVA Emporoviomihaniki A.E. MAVA was  an importer and exclusive agent of vehicles and spare parts from the French company RENAULT SA in Greece. Em. Psispsikas & SIA E.E complained that the behavior of MAVA Emporoviomihaniki A.E  during their collaboration violated provisions on free competition and, in particular, articles  1 § 1 and 2 of Law 703/1977  and Regulation (RC) No 1475/1995.

Specifically, company Em. Psispsikas & SIA E.E complained that MAVA Emporoviomihaniki A.E , forced its distributors  to sell new RENAULT  cars  at prices that  was determined by the defendant , who instituted a resale price maintenance scheme and forced distributors to finance these cars through its subsidiary (FIREN), and mandated the achievement of monthly and 3-month  car-sale targets , determined unilaterally by Renault.

The Hellenic Competition Commission  (HCC, hereinafter) found that there was an agreement between the company and the distributors for direct and indirect price-fixing of RENAULT cars in the Greek territory for a period of six (6) years and seven (7) months. The HCC applied the relevant case law of the Court of Justice (namely Decision Dun / op Slazenger International LTD by EU Commission, T-43/92).

 In Dunlop Slazenger the Court of First Instance distinguished between the general export ban that Dunlop Slazenger had imposed on its distributors in unwritten terms of the distribution agreement, and a series of measures that Dunlop Slazenger   implemented, in concert with certain of its exclusive distributors, in order to ensure the enforcement of that general export ban and the elimination of parallel exports. The measures consisted of refusals to supply parallel exporters, pricing measures to make exports uncompetitive, buying back products which have been exported through parallel channels, product marking in order to identify the source of parallel imports: each of which apparently had a unilateral character. The Commission, upheld by the CFI, found that these measures, implemented for the purpose of securing compliance to the general prohibition on exported products covered by the distribution agreement, constituted a concerted practice.

Specifically, for 7 months in 1996, the defendant admitted that it had agreed with its distributors that they were not allowed to offer any discount with regard to the sales of new RENAULT cars in Greece, therefore implementing a price fixing policy.Additionally, in 1998 MAVA Emporoviomihaniki A.E established a mechanism of performance targets to network distributors . In order to obtain the quality bonuses (so named by the defendant ), distributors were required to sell new RENAULT cars at prices that were determined and communicated to distributors with circulars. This “quality premium” applied until 2001.

As demonstrated by the documents, 76% of defendant distributors received at least one premium and therefore, the HCC determined that the distributors had agreed to  accept the RSM scheme.

In 2002, the terms of achieving quality bonuses amended by the defendant, and the condition of car sales at fixed prices, was removed from the list of conditions of the “quality premium”. However, throughout the course of the year, Renault continued to send circulars to its distributors requiring sales in fixed prices.

Moreover, for distributors to achieve quality bonuses, they were obliged to sell at least 40% of all previous annual car sales using funding programs of FIREN, a subsidiary company of  the defendant. Based on the calculation that only 30% of cars were sold in a given time period by cash, the Competition Commission ruled that, in fact, to receive bonuses, the distributors were obliged to use FIREN for at least 75% of financed car sales.

According to the HCC, this practice was indirectly a method of fixed resale price maintenance for RENAULT cars in Greece, as the funding negotiations are one of the very few opportunities that consumers have to negotiate car prices. By limiting the choices of financial institutions, the HCC found that the defendant and its distributors in reality had limited consumers’ ability to lower prices. The scheme indirectly constituted a fixed resale price policy of RENAULT  cars, meaning the policy infringed Articles 1, Par. 1 of Law 703/1977, and 81 Par. 1st of the Treaty.

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As for the other alleged practices, the HCC concluded that the evidence did not amount to an infringement of the competition rules. Regarding the calculation of the fine that was imposed on the defendant, EA took into account the importance and the duration of the infringement and its impact on other sectors of the economy and consumers, and found that the practice, which took place over a period of six years and seven months, was a serious breach of the competition rules.

Based on the above, the HCC fined the defendant 12.692.895 euros.

The HCC also ruled that the defendant imposed the fixed prices agreement on economically weaker distributors and therefore refrained from fining the distributors

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  • THE HELLENIC COMPETITION COMMISSION STRIKES DOWN INDIRECT ATTEMPT AT RPM BY FRENCH CAR MANUFACTURER (EM. PSISPSIKAS & SIA V. MAVA EMPOROVIOMIHANIKI)