The Office Punishes a Cartel of Xiaomi Electronics Distributors Detected Thanks to the Leniency Program
In the period under review, Beryko and Witty were the main distributors of Xiaomi electronics in the Czech Republic (mainly mobile phones, smart watches, wristbands and other smart devices, other electronics and related accessories). They supplied these products to other sub-distributors and retailers and also acted as retailers themselves.
The illegal conduct took place from the beginning of 2018 until the end of May 2019, when representatives of both undertakings communicated with each other in various ways and coordinated the setting of sales prices and other pricing indicators (e.g., the amount and duration of discount promotions), allocated customers and exchanged sensitive business information in the wholesale and retail sale and distribution of Xiaomi products in the Czech Republic.
The undertakings infringed both Czech and EU competition rules, as their conduct was capable of to affect the trade between the EU Member States.
The Office gained initial indications of the anti-competitive behaviour on the basis of a leniency application from Witty. Subsequently, Beryko prevented the Office from performing a thorough on-site inspection at its business premises, for which it was consequently imposed a final fine of CZK 22,500,000 (click here for details).
Beryko faced a fine of almost CZK 60 million for its participation in the cartel agreement. Subsequently, however, it also applied for leniency, met the statutory conditions for its application and its fine was substantially reduced. In addition, when setting the fine, the Office took into account that Beryko had implemented an effective compliance programme and also fulfilled the conditions for the so-called settlement.
Leniency - participation in a cartel can be atoned for
A leniency programme is an investigative tool used by competition authorities to allow a cartel participant to avoid or reduce the fine that would otherwise have been imposed for anticompetitive conduct. The important condition is that it provides a competition authority with previously unknown information about the existence and the course of the prohibited agreement in which it participated. Only the first cartel participant to confess gets full immunity. The other members of the cartel can only get a reduction in the fine (of a few tens of percent), subject to condition they disclose previously unknown information about an anticompetitive conduct to the authority. Since fines imposed for anticompetitive conduct can amount to up to 10% of an undertaking's turnover, which can be tens or hundreds of millions of crowns in absolute terms, the reduction obtained through leniency can be very substantial. Details of the leniency program can be found here.
Press Unit of the Office for the Protection of Competition
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