Tech firms fined £99m for fixing online sale prices
FROM hairdryers to headphones, millions of products sold online to European consumers had their prices artificially inflated by technology firms.
That is the conclusion of EU antitrust regulators who have slapped Philips, the technology company, with a €29.8m (£25.5m) fine for restricting sales of its products online and raising prices.
The Dutch business was hit with the penalty by the European Commission following a 17-month investigation as part of a crackdown against restrictions on international online sales, such as tweaking offers based on a customer’s location or nationality.
Margrethe Vestager, the European competition chief, said: “If a retailer was offering lower prices than Philips wanted, [Philips] told that retailer to increase prices, so consumers had to pay more. This is illegal under EU rules.”
Based in Amsterdam, Philips employs 105,000 people in 60 countries. It makes everything from alarm clocks and hi-fi systems to CT scanners and lighting equipment. The announcement also included three other fines against electronics companies that put restrictions on the ability of online retailers to set their own prices for appliances, notebooks and hi-fi products.
These were Asus, the Taiwanese laptop manufacturer, which was hit with a €63.5m penalty, Denon & Marantz, fined €7.7m, and Pioneer, which was handed a €10.2m penalty.
In total the fines from the European authority amounted to €111m (£99m). However the Commission said this was a reduced figure as in all four cases the companies’ co-operated in the investigation. It started in February last year and covered a total of 15 companies in three different industries: consumer electronics, video games and hotel rooms. The EU competition enforcer said the companies engaged in “fixed or minimum resale price maintenance” by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products such as kitchen appliances, notebooks and hi-fi products.
The four manufacturers intervened particularly with online retailers, that offered their products at low prices. If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions.
Ms Vestager added: “The online commerce market is growing rapidly and is now worth over €500bn in Europe every year. More than half of Europeans now shop online.
“As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products.
“This is illegal under EU antitrust rules. Our decisions today show that EU competition rules serve to protect consumers where companies stand in the way of more price competition and better choice.”
Many retailers, including the biggest online companies, use pricing algorithms which automatically adapt prices to those of competitors. In this way, the pricing restrictions imposed on online retailers typically had a bigger impact on overall online prices for consumer electronics.
The decision by Brussels to fine a European company came a week after it handed down a record €4.34bn (£3.87bn) fine to Google. It received the penalty after the EU found it had illegally bound smartphone manufacturers to deals that forced them to install Google apps. This was the second multibillion euro fine Brussels had ordered Google to pay in little more than a year.