No resale price maintenance by Luxlait

By Decision 208-FO-03 of 26 June 2018, the Competition Council (“Council”) closed the file against Luxlait for the alleged imposition of resale prices (so-called “resale price maintenance”) in violation of the Law of 3 October 2011 on Competition, as amended (“Law”) and Article 101 of the Treaty of the Functioning of the European Union (“TFEU”), without imposing a fine.

The case was launched in 2010 by a complaint from a retail distributor alleging that Luxlait refused to enter into a contract with him. This distributor explained the refusal by his aggressive pricing policy seeking to maintain the lowest prices in the market whereas Luxlait would have wanted to control resale prices and also alleged involvement by Luxlait to prevent him from establishing a commercial relationship with a wholesale distributor for certain Luxlait products.

The Council defined the relevant market as the national market for the retail distribution of milk products.

After dismissing various procedural arguments raised by Luxlait, including a claim alleging a violation of its rights of defence given the length of the procedure, the Council rejected the complaint on the merits.

The Council recalled that the imposition of resale prices constitutes a 'by object' infringement of competition contrary to Article 3 of the Law and Article 101 TFEU prohibiting agreements restricting competition.

However, in order to examine whether such an infringement was established in this case, and, in particular, whether an agreement within the meaning of Article 3 of the Law and Article 101 TFEU could be found, the Council applied a three-prong test, based in particular on French jurisprudence, requiring proof of the fact that resale prices were discussed between supplier and distributor, that a pricing policy including at least a price surveillance was put in place by the supplier and that the prices discussed were effectively applied in practice.

Despite the evidence cited and the conclusion in the statement of objections that all three conditions were fulfilled so that an infringement was established and a fine needed to be imposed, the Council found that there was insufficient proof of the second condition being fulfilled, i.e. the existence of a pricing policy. It held, in particular, that if proof existed that Luxlait followed the pricing practices of its distributors, this showed at most an interest of Luxlait in the prices they applied but no elements were provided of the implementation of measures aimed to have these prices respected or of retribution measures against commercial partners not applying them.

The decision evidences a high burden of proof weighing on complainants of resale price maintenance practices.