The Office Imposed a Record Fine of CZK 125 million on ELECTROLUX for Anticompetitive Conduct

The Office for the Protection of Competition (hereinafter referred to as “the Office”) punished the undertaking ELECTROLUX, by imposing a fine of CZK 125 404 000 for long-term anticompetitive conduct. ELECTROLUX confessed to the infringement of the Czech and EU competition law and did not appeal against the decision of the Office. Therefore, the decision has already come into force.

“The anticompetitive conduct – resale price maintenance, in other words the prohibition of setting a lower price for resale, had an impact on a large number of Czech households. For example, refrigerators, washing machines or vacuum cleaners produced by the companies ELECTROLUX, AEG and Zanussi were sold for substantially higher prices than if fair price competition among dealers was in place. Our officers did an excellent job of securing sufficiently strong evidence, and, therefore, the party to the proceedings cooperated with the Office, confessed to the infringement and did not challenge the record fine within the settlement procedure. It has to be stressed that this particular cooperation allowed to uncover more complex conduct and significantly accelerated the entire process of the proceedings. Nevertheless, it is still the highest fine for vertical price agreements and was imposed within the settlement procedure. Therefore, the state does not have to face many years of litigation” announced the Vice-chair of the Office Kamil Nejezchleb who led the investigation.   

ELECTROLUX is part of a Swedish group of undertakings and is mainly active in the sector of large and small household appliances produced by the brands Electrolux, AEG and Zanussi, while in some segments it controls a significant part of the market in the Czech Republic and is considered a major player. From at least the end of 2012 until autumn of 2021, ELECTROLUX was setting the minimum resale prices to its buyers which then effected end consumers. If the retailer decreased the price below the set threshold, ELECTROLUX urged the retailer to increase its prices, even under the threat of sanctions, which were actually imposed in some cases. Therefore, prohibited vertical agreements on resale price maintenance were in place.

ELECTROLUX, as the exclusive supplier of products of the above-mentioned brands, was able to establish the composition of the entire supply chain through distributors and other specific methods. Thus, ELECTROLUX was able to enforce compliance with the set retail prices even on retailers with whom ELECTROLUX had no direct agreement. The undertaking also used price comparators such as heureka.cz to check prices. Therefore, ELECTROLUX was able to influence the price level of the product concerned in the relevant markets. By entering into agreements on the resale prices of the product concerned with those retailers who initially sought to offer the product at the lowest prices, ELECTROLUX had an actual impact on them.

In addition, the Office proved that ELECTROLUX prevented certain buyers to resell its products to other retailers by wholesale methods. In doing so, it committed prohibited agreements to restrict the range of customers.

The seriousness and the duration of the anticompetitive conduct influenced the level of the fine imposed. The voluntary termination of the anti-competitive conduct, the above-standard cooperation of the party to the proceedings and the extension and strengthening of the competition compliance programme, as well as the use of the settlement procedure were considered mitigating circumstances.

This is the second vertical cartel agreement in the sector of household appliances to be detected and punished by the Office in a short period of time, and while it is currently dealing with five other proceedings in this area. So far, the Office's findings demonstrate that a significant number of distributors, importers and manufacturers use prohibited practises that restrict price competition among sellers, and, thus, increase the price level for consumers. These are therefore not trivial misconducts, but a recurring pattern of behaviour that covers a significant part of the market and has a true, negative impact on the overall welfare of Czech consumers.

Press Unit of the Office for the Protection of Competition
24/024 – S0187/2023