Top-Fish 2001 Kft. (VJ/31/2021)

1. CASE SUMMARY

A. Summary of facts

Top Fish 2001 Kft. is a major wholesaler of fishing products in Hungary and supplies several well known and premium brands to fishing retailers.

Between September 2017 and July 2021, Top Fish 2001 Kft. imposed minimum resale prices for its product range on online retailers. The company continuously monitored retailers’ compliance with its purportedly recommended resale prices. It threatened retailers that offered products on their websites below those prices with the suspension of supplies.

Initially, Top Fish 2001 Kft. used indirect measures, including email warnings requesting retailers to comply with the recommended resale prices. From 2019 onwards, it used more direct measures. The terms and conditions that resellers accepted upon registration expressly provided that the prices displayed in their online shops could not be lower than those included in the applicable retail price list. Top Fish 2001 Kft. also informed retailers that they could not organise promotions or offer price reductions without first consulting the company.

B. Legal analysis

B.1. - Framework of analysis

Manufacturers and wholesalers may recommend consumer prices for the products they distribute. However, retailers must remain free to determine their own resale prices, including prices below the recommended level. Lower resale prices may increase competition between retailers, which may benefit consumers.

The Hungarian Competition Authority assessed the conduct of Top Fish 2001 Kft. under both Hungarian and EU competition law.

B.2. - Article 101(1) TFEU and Hungarian competition law

The Hungarian Competition Authority found that Top Fish 2001 Kft. had restricted the pricing freedom of fishing retailers. Although the company presented the relevant prices as recommended resale prices, it monitored retailers’ compliance with those prices and took measures to prevent retailers from setting lower prices.

Top Fish 2001 Kft. initially sent email warnings to retailers that offered products below the recommended prices. From 2019 onwards, the terms and conditions accepted by resellers expressly prohibited them from displaying prices in their online shops that were lower than those included in the applicable retail price list. The company also threatened retailers that failed to comply with the suspension of supplies and required them to consult the company before organising promotions or offering price reductions.

The Hungarian Competition Authority considered resale price maintenance to be one of the most serious restrictions of competition. By restricting retailers’ ability to determine their resale prices independently, such conduct may cause consumers to face higher prices than they would under effective competition between retailers.

The Hungarian Competition Authority concluded that Top Fish 2001 Kft. had infringed both Hungarian and EU competition law by limiting the pricing freedom of the fishing retailers supplied by the company.

B.3. - Fine

The Hungarian Competition Authority imposed a fine of 27 million HUF on Top Fish 2001 Kft. When determining the amount of the fine, it took account of the company’s cooperation during the proceedings. In particular, Top Fish 2001 Kft. admitted the infringement, voluntarily provided evidence, waived its right to seek legal redress and undertook to introduce an internal compliance programme intended to prevent similar infringements in the future.

2. QUOTES

"Prices to be shown in online shops are able to unify the prices, irrespective of the individual costs and capacity of the undertakings, which may result in even undertakings operating with lower costs not being required to decrease their prices. Moreover, they do not have the possibility to set their prices below the fixed minimum prices. Consequently, as a result of the general application of this price range in the market, prices do not, or do not correctly, reflect differences in professionalism, reliability and efficiency between undertakings." (free translation)

3. RELEVANT LEGISLATION

• Article 101 TFEU
• Regulation 720/2022
• Hungarian Act LVII of 1996 on the Prohibition of Unfair Trading Practices and Unfair Competition
• Hungarian Government Decree 205/2011 (X. 7.)
• Hungarian Act CL of 2016 on General Public Administration Procedures
• Hungarian Act I of 2017 on the Code of Administrative Litigation
• Hungarian Act CCXXII of 2015 on the General Rules for Trust Services and Electronic Transactions

4. PRACTICAL SIGNIFICANCE

The decision confirms that recommended resale prices may infringe Hungarian and EU competition law where a supplier monitors retailers’ compliance and uses warnings, contractual conditions or threats to prevent them from setting lower prices. It also illustrates that an undertaking’s cooperation with the competition authority, including admitting the infringement, voluntarily providing evidence, waiving legal redress and adopting an internal compliance programme, may be taken into account when determining the fine.