The European Commission has imposed fines totaling more than €157 million on three high-end fashion brands – Gucci, Chloé, and Loewe – for imposing their resale prices, in violation of EU competition rules.
What were they accused of?
The European Commission’s investigation revealed that these three brands restricted the ability of their retailers -independent resellers -to set their own re-selling prices for the products.
- These brands required their retailers not to deviate from recommended resale prices, maximum discount rates, or specific sale periods. In some cases – temporary ones – discounts were even prohibited altogether.
- At the same time, the retailers monitored the prices charged by resellers and contacted them in the event of any deviation in order to enforce their pricing policy.
- As a result, resellers applied the prices imposed by the brands.
This practice, known as “imposed sales prices,” applied to both online and physical sales, with the result that retailers were deprived of their independence in setting prices, competition was reduced, and consumers were charged higher prices.
Gucci also required its retailers to stop selling a whole range of products online.
These practices lasted for several years between 2015 (2019 for Chloé) and 2023.
The fines imposed
The fines imposed on the three brands were reduced, as they cooperated with the Commission by providing evidence and acknowledging the facts and infringements committed:
- Gucci: €119,674,000 (after a 50% discount)
- Chloé: €19,690,000 (after a 15% discount)
- Loewe: €18,009,000 (after a 50% discount)
Key points
If you are at the head of a distribution network—regardless of the nature of your network (retail, franchise, affiliation, selective distribution, etc.) – here are a few rules to keep in mind:
- Fixed or minimum resale pricing practice is prohibited by competition law (in France by Article L.420-1 of the Commercial Code) as it is considered anti-competitive and therefore harmful to consumers.
- Recommended resale prices may be communicated by the head of network to its distributors (resellers, retailers, franchisees, etc.), provided that no pressure or incentive is exerted to enforce these recommended resale prices, nor any sanctions imposed in any way on distributors who do not comply with them.
- Maximum prices may be imposed by the head of network on distributors in order to maintain a certain degree of price consistency within the network.
Please do not hesitate to contact us if you have any questions about drafting your contracts and/or auditing your network’s practices.