2/14/2018 Austria: RPM Judgment of the Austrian Supreme Court against Austrian food retailer SPAR [1]: Schoenherr

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Austria: RPM Judgment of the Austrian Supreme Court against Austrian food retailer
SPAR [1]
06 November 2015 | newsletters

The Supreme Court upheld a decision of the Cartel Court against SPAR, a leading company in the Austrian food retail sector, concerning collusion on resale prices (Resale Price Maintenance; RPM) with
suppliers of dairy products. At the same time, the court increased the ne imposed by the Cartel Court tenfold, i.e. from EUR 3 million to EUR 30 million.

1 Case Background

The Cartel Court had ned SPAR, one of the major players in the Austrian food retail sector, EUR 3 million for vertical and horizontal collusion on resale prices with various suppliers between July 2002 and
March 2012. The proceedings were limited to dairy products, while proceedings for other product categories are still pending in rst instance. As established by the Cartel Court,[2] SPAR had developed a
general strategy that, whenever a supplier requested an increase of the purchase price, the retail margin must remain constant, not only with regard to SPAR sales but in the entire industry. Thus, increases
of the purchase price were to be passed on to the end consumers. To this end, the relevant suppliers were required to inform SPAR's competitors about the agreed resale price by means of a 'price
recommendation', and they were induced to implement this price level. The Cartel Court held that such practices are in breach of Article 101 AEUV as well as Section 1 of the Austrian Competition Act,
because they limit not only suppliers but also other competitors at the retail level in their price-setting autonomy.

2 The Court's judgment

The Supreme Court upheld the Cartel Court's judgment on appeal and increased the ne imposed tenfold to EUR 30 million. The court justi ed the need to increase the ne pointing to the insu cient
deterrent e ect of the ne imposed by the Cartel Court in the light of the high turnover achieved by SPAR group and the (presumed) potential bene ts resulting from the infringement. All in all, the Supreme
Court considered a ne amounting to 0.35 percent of the global turnover of SPAR to be proportionate.

As regards setting of nes in general, the Supreme Court held that 10% of the group turnover achieved during the last business year constitutes not only a cap but the basis for the calculation of the ne. In
this respect, the court followed the recent judgment of the German Federal Supreme Court in the case Grauzement [3] and explicitly deviated from the Fining Guidelines of the European Commission.

With respect to the argued 'novelty' of the infringement, the Supreme Court highlighted that the practices in question do not constitute a new type of competition law infringement but qualify as a vertical
price xing agreement reinforced at the retail level. The 'obligation' imposed upon the suppliers to promote a particular price level with competing retailers was considered to add to the gravity of the
infringement, similar to a hub-and-spoke cartelization. According to the Supreme Court, there is no need for a direct agreement between retailers to take the additional adverse e ect of such behaviour on
competition into account.

3 Conclusion and practical implications

Having the actual facts of the case in mind, as established by the Cartel Court, it is not surprising that the Supreme Court con rmed the existence of an infringement. The much discussed question whether
'pure" resale price maintenance, without additional horizontal elements, inevitably quali es as a 'restraint by object' was unfortunately not answered in the judgment.

From an overall perspective, the decision sets a milestone due to the statement that the 10 percent upper limit for nes sets the range for their calculation. This means that the ne calculation is primarily
based on the overall turnover of the undertaking involved and not on the turnover that has been a ected by the infringement. As a result, the size of the undertaking – meaning the entire group to which
the respective defendant belongs – becomes more relevant than its actual participation in and the scope of the infringement. In practical terms this approach may e ectively discriminate large groups of
companies with business activities in several business areas vis-à-vis more specialized undertakings if the infringement relates to just one product area. Consequently, large groups may in the future expect
substantially higher (and maybe even disproportionate) nes.

In our opinion, this appears somewhat unjusti ed, considering that the objective of the 10 percent upper limit (which is modelled on Article 23 of EU-Regulation 1/2003) is to ensure that the ne does not
exceed the nancial capacity of the undertaking concerned, rather than deterrence. In that respect, the Supreme Courts approach is in con ict with the intention of the Austrian legislator to adapt the
Austrian Cartel Act to European competition rules. Currently, the Ministries of Justice and Economics prepare amendments to the Austrian Cartel Act, both with a view to implement the EU Damages
Directive as well as to strengthen the Federal Competition Authority, not least in abuse cases. It remains to be seen whether the legislator uses this occasion to remedy possibly unwanted consequences of
the SPAR decision.

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[1]     Austrian Supreme Court, 16Ok2/15b (16Ok8/15k), decision of 8 October 2015.

[2]     Note that, currently, the factual ndings of the Cartel Court are not subject to judicial review in the second and nal instance.

[3]     German Federal Supreme Court, KRB 20/12, decision of 26 February 2013.

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2/14/2018 Austria: RPM Judgment of the Austrian Supreme Court against Austrian food retailer SPAR [1]: Schoenherr Attorneys at Law

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