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DENMARK: Kickback System in distribution agreements resulted in fine.

On 6 April 2017, Olympus Danmark A/S ("Olympus Denmark") accepted to pay a fine of approx. EUR 500,000 for violation of the prohibition against anti-competitive agreements of the Danish Competition Act.

Olympus had applied a so-called kickback system to determine the distributors' net purchase price, which could result in binding resale prices. The fine was fixed according to the new stricter Danish rules.

Peter GREGERSEN - 14.09.17
Country expert

The Kickback System

The case concerned distribution agreements between Olympus Denmark, manufacturing cameras, and its independent distributors. The agreements contained a kickback system under which Olympus Denmark repaid a cash amount of the distributors' purchase price to the distributors when (re)selling specific camera models at specific minimum prices. If the distributors (re)sold these cameras at a lower price, they were not repaid. In this way, Olympus Denmark created an incentive for the distributors not to (re)sell these cameras below Olympus Denmark's recommended resale prices.  

Olympus Denmark stopped using the kickback system on 1 November 2013. At the time, Olympus Denmark had used the system for almost two years.

Binding resale prices

Agreements between manufacturers and distributors that directly or indirectly imply a fixed price or a minimum resale price have a restriction of competition as their purpose.

Binding resale prices are considered hard-core restrictions. This means that binding resale prices are not covered by the Vertical Block Exemption Regulation. This also applies even if the binding resale prices are part of a selective distribution system, or if the contractual parties hold small market shares.

Olympus Denmark's kickback system therefore violated Section 6 of the Danish Competition Act (which is similar to Art. 101 of the Treaty on the Functioning of the European Union).

Higher fine level after the amendment of the Competition Act

Part of the violation took place after 1 March 2013 when the Competition Act was amended. The amendment resulted in a significantly higher fine levels. 

When fixing the fine towards Olympus Denmark, the Danish Competition and Consumer Authority attached importance to the fact that it concerned a vertical price agreement, which is a gross violation of the Competition Act. Importance was also attached to the violation's duration and Olympus Denmark's  turnover. 

As a mitigating circumstance when fixing the fine, the authority to into account that the violation ended immediately after the Danish Competition and Consumer Authority's approach to the company, and that Olympus Denmark had cooperated with the authorities.

Olympus Denmark accepted the fine from the Competition and Consumer Authority and the matter has therefore been closed without legal action.

 

Peter Gregersen, IDI agency and distribution country expert for Denmark

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