The CPC has addressed allegations for committed infringements of Art. 15, par. 1 of the Law on Protection of Competition to Iventas EOOD
By Statement No. 241/12.03.2020 delivered under case No. КЗК-360/2018 on the grounds of art. 74, par. 1, item 3 of the LPC, the CPC has addressed allegations for committed infringements of Art. 15, par. 1 of the LPC, manifested in participation in series of prohibited agreements concluded at the wholesale level of trade, fixing the resale price of child care and mother care products between Iventas EOOD and its customers (retailers) and applying dual pricing for child care and mother care products depending on the resale channel (via physical shop or online) between Iventas EOOD and its customers operating online stores.
The proceedings before the CPC have been initiated upon a signal filed by consumer indicating of permanently identical prices of Philips Avent products in stores operated by various distributors.
On the basis of the filed signal, the CPC has conducted unannounced inspection in the premises of Iventas EOOD. The Commission has collected copies of electronic correspondence, contracts, notes from meetings, and other documents indicating that an agreement was reached for the fixing of the resale prices of products distributed by Iventas EOOD at the level of the recommended resale price.
During the inspection the CPC officials have been obstructed from receiving full access to the server-kept documents of the company and to the content of the company manager’s computer. Therefore by Decision No. 619/05.06.2018 the CPC imposed monetary sanction to Iventas EOOD for failure to comply with the obligation to cooperate during inspection, foreseen in art. 46 of the LPC. The sanction has been upheld in full by the Supreme Administrative Court under file No. 8998/2018.
On the basis of the evidence collected, the CPC came to the preliminary view that by recourse to various incentives and measures for monitoring in the course of its long-term commercial relationships with clients (retailers), Iventas EOOD aims at fixing the retail price of its products in the contracts with retailers, without the corroboration of whom this objective could not be attained.
The Commission ascertained complete alignment of retailers with the communicated as “recommended” retail prices by their supplier.
The supplier, also operating as a retailer of identical products, complies on its part with the prices communicated to the clients.
Complete alignment of the conduct of retailers is also observed as regards the size of rebates and the period of promotions, which are also dictated by the suppler, according to the collected evidence. Such intervention of a supplier in the conduct of another independent market player cannot be economically justified and runs counter to the rules of free competition. Furthermore, the collusion between Iventas EOOD and its clients-retailers is the only explanation to their economic conduct.
Based on the evidence collected, the CPC established that there is evidence for second infringement of the competition rules, amounting to an agreement for the application of different rebates for identical products, depending on the distribution channel used by the customer. In such manner Iventas EOOD effectively discourages the retailers to use internet to sell their products and thus limits their ability to reach a wider customer base.
Considering the factual background the CPC established that Iventas EOOD reached a prohibited agreement with its clients-retailers with the objective of fixing the retail price which prevents, restricts or distorts the competition on the market for wholesale trade with childcare products, in this account products for babies and mother care products, by directly or indirectly setting the retail prices or other trade conditions by virtue of art. 15, par. 1, item 1 of the LPC. On a separate note Iventas EOOD has been suspected in participating in a second infringement manifested in prohibited agreement reached with its clients-retailers, operating an online stores having the objective of restricting sales by setting different levels of discounts and conditions for eligibility, depending on the retail channel – via electronic or physical store. The suspected infringement prevents, restricts or distorts the competition on the market for wholesale trade with childcare products, in this account products for babies and mother care products by its very nature by restricting or controlling the production, trade, technical development and investments as per art. 15, par. 1, item 3 of the LPC.
Within 45 days the addressee of the Statement is entitled to submit written objections to address the allegations. The period runs from the day of the Statement receipt.