In its press release of 17.12.2018, the European Commission announced that the clothing company Guess had been fined EUR 39,821,000 for anti-competitive agreements to stop cross-border sales. (Based on the Commission’s 2006 Guidelines on Fines, see press release and memo)
EU Competition Commissioner Margrethe Vestager said: “Guess’ distribution agreements tried to prevent EU consumers from shopping in other Member States by blocking retailers from advertising and selling cross-border. This allowed the company to maintain artificially high retail prices, in particular in Central and Eastern European countries. As a result, we have today sanctioned Guess for this behaviour. Our case complements the geoblocking rules that entered into force on 3 December – both address the issue of sales restrictions that are at odds with the Single Market.”
The Commission granted Guess a 50% reduction of the fine in return for its cooperation. In addition to uncovering an as yet unknown infringement – the use of Guess trademarks and brand names for online search engine advertising purposes – the company has explicitly acknowledged the infringements of EU antitrust law.
Geoblocking regulation
This Decision supplements Regulation 2018/302 on unjustified geoblocking, which entered into force on 3 December 2018. (We reported “New obligations for online content service providers in the EU“).
The Regulation prohibits geoblocking and other restrictions on a geographical basis that affect cross-border shopping and selling online and thus limit the ability of consumers and businesses to reap the benefits of online commerce.
Under the Regulation, a supplier may not contractually prohibit a retailer from responding to unsolicited customer enquiries (so-called “passive sales”) if specific conditions set out in the Regulation are met. Guess’s behaviour in restricting passive sales to consumers is now also prohibited by the Geoblocking Regulation.
However, the Regulation does not prohibit restrictions on “active selling”, i.e. the active approach to individual customers, e.g. through advertising. However, restrictions on active selling must also be compatible with EU competition rules. This was not the case in this case, as the Commission noted in its decision.
Furthermore, the EU Commission informs about possible claims for damages by affected parties and the whistleblower system (link to tool) that individuals should be able to report anti-competitive behaviour more easily.