Dutch court confirms: Samsung's 'price recommendations' practices were unlawful
On 13 November 2023, the Rotterdam District Court delivered its judgment in the ACM's first-ever vertical restraints case. It found that the ACM was right in imposing a fine on Samsung for coordinating its retailers' online consumer prices under the pretence of 'price recommendations' (see also our earlier newsletter on the ACM's decision). The Rotterdam District Court found that as Samsung's retailers agreed to apply consumer prices at a level requested by Samsung or at least acted in line with Samsung's expectations, vertical coordination had been established. It also found that no contractual coercion, sanctions or financial incentives were necessary to establish an infringement. Although Samsung may still appeal this judgment, it is a welcome first step towards more clarity on where to draw the line between legitimate resale price recommendation practices and illegal resale price maintenance.
In our newsletter of 7 October 2021, we reported on the ACM's first-ever vertical restraints case, in which it imposed a EUR 40 million fine on Samsung for coordinating its retailers' online consumer prices for televisions under the pretence of 'price recommendations'. In our newsletter of 4 October 2023, we discussed how the ACM continued its vertical fight by fining LG for similar behaviour.
Just over a month after the publication of the LG decision, another notable development occurred in this vertical landscape. On 13 November 2023, the Rotterdam District Court issued its judgment in the aforementioned Samsung case. This marks the first – but probably not the last – time that a Dutch court has provided its views on ACM’s recent 'price recommendation' cases.
As a reminder, Samsung's practices included the monitoring of its retailers' online consumer prices for televisions and contacting them if, in Samsung's view, its retailers were offering the televisions at too low a price. The ACM found that this behaviour went beyond the genuine use of price recommendations and amounted to vertical price coordination. This has now been confirmed by the Rotterdam District Court.
Based on an extensive list of factual evidence, the Rotterdam District Court found that Samsung's retailers agreed to follow Samsung's price requirements. Moreover, in cases where an agreement as such could not be established, it was at least clear to the retailers what Samsung expected of them and they acted on that expectation. This sufficed for establishing vertical coordination. The Rotterdam District Court found it irrelevant in this context that no contractual coercion, sanctions or financial incentives were involved, as Samsung had claimed. Contractual coercion, sanctions or financial incentives are only examples of means that can lead to an infringement (by object). They are not conditions for finding such an infringement, the Rotterdam District Court clarified. With reference to case law of the EU Court of Justice, the Rotterdam District Court's decisive criterion for finding an infringement (by object) in the context of 'price recommendations' is relatively simple, namely whether distributors are free to determine their own resale prices. In the Rotterdam District Court's view, Samsung's retailers clearly were not.
In the light of this judgment, companies are once again well advised to take a fresh look at their resale price recommendation practices. It is crucial to ensure that these do not go beyond their intended purpose: genuine recommendations that distributors are free to deviate from. Since Samsung can still appeal the Rotterdam District Court's judgment, it remains to be seen whether this judgment will be upheld in the future. However, it is a welcome first step towards greater clarity on how to assess the legitimacy of price recommendation practices. It will be interesting to see whether LG will be more successful in a possible appeal against the ACM's similar decision.
