Scrutiny of retail pricing of luxury goods appears to continue to be a priority of European competition authorities. The latest example is the Polish Competition Authority’s ongoing probe into the luxury watch sector.
The probe became public through dawn raids, and targets three Polish importers of branded watches: The Swatch Group Poland; Przedsiębiorstwo Handlowo–Usługowe Jubiler; and Anyro & Co. Each company holds the exclusive rights to import specific branded watches into Poland. The Competition Authority is investigating whether the importers agreed minimum retail prices with their respective Polish distributors. Specifically, the Authority is investigating whether prices of Citizen, Hugo Boss, Certina, Tissot, Swatch and other luxury watches might have been subject to price fixing. Competition authorities in the EU have traditionally considered resale price maintenance to be a “hardcore” restriction of competition (although the European Commission’s 2010 Regulation and Guidelines on vertical restraints opened to door to potential efficiency justifications, in particular circumstances).
More generally, the Polish investigation confirms the continuing focus of competition enforcers on distribution in the fashion/sportswear sectors. For instance, the Danish authority raided sportswear brand owner Hummel earlier this year over resale price maintenance suspicions, and the German authority is investigating the online distribution of Adidas products.
The recent interventions of European competition authorities highlights the importance of well-structured and implemented distribution arrangements. Brand owners should bear in mind, for example, that arrangements that would enable suppliers to fix their distributors’ retail prices or impose minimum prices are highly unlikely to pass competition muster.