Competition Commission: The import, wholesale and retail markets of power tools are threatened with a fine

A fine for prohibited vertical agreements in the import, wholesale and retail markets of motorized hand tools as well as garden tools, suggests the rapporteur of the General Directorate of Competition, after an ex officio investigation.

The plenary of the Competition Commission will meet to decide, following the “Declaration of Settlement” on behalf of the parties involved.

However, it is noted that the recommendation is not binding for the Competition Commission, which will decide taking into account all the elements of the case file.

In detail, the announcement of the Competition Commission states the following:

“The Plenary Session of the Competition Commission (CA) will meet to decide, in accordance with paragraph 35 of its Decision No. 704/2020, on the acceptance of the relevant Dispute Settlement Proposals submitted by companies active in the import and trading markets motorized hand tools and garden tools.The above meeting of the Commission will take place following the “Declaration of Settlement” on behalf of the parties involved, pursuant to paragraph 37 of Decision No. 704/2020 EA.

For the purposes of the investigation, the General Directorate of Competition carried out, within the framework of its responsibilities, an on-site inspection at the headquarters of, among others, the above companies and it was deemed appropriate to send questionnaires to the above companies.

The relevant market of products or services includes all products or services considered by the consumer to be interchangeable or substitutable for each other, due to their characteristics, their price and their intended use. In the present case, the companies involved are active in the import and trading markets of a) motorized hand tools and b) garden tools.

The relevant geographic market includes the area in which the undertakings concerned sell the relevant products under sufficiently homogeneous conditions of competition. In this case, the relevant geographical area can be defined firstly as the whole of the Greek territory, as the companies involved are active or may be active throughout the territory.

The parties involved in the case expressed in writing their interest in investigating the possibility of their inclusion in the DTT and filed a relevant request, in accordance with what is provided in par. 16 of no. 704/2020 of EA Decision. Following these requests, the EA at its meeting on 21.03.2022 unanimously decided that this case is suitable and can be included in the said settlement procedure, as it meets the criteria for being included in it (No. 704/2020 Decision EA, par. 6, 9 and 31). To this end, in the context of exercising its discretion to submit cases to a settlement process, the EA took into account, in particular, the sincere intention of the interested parties to submit to the dispute settlement process, the number of businesses requesting to be submitted to a settlement process, the nature of the infringement in question as a vertical collusion and the expected degree of procedural efficiency, which was judged to be significantly high in this case. The Rapporteur then invited the interested parties to bilateral meetings and when a sufficient degree of consensus was reached regarding the facts, their legal characterization, the gravity and duration of the violations, the degree of proof of the objections based on the evidence and the calculation of the range of the fine, the involved parties responded to the Rapporteur’s invitation to submit a “Dispute Settlement Proposal” and these were submitted by them, in accordance with par. 27 of no. 704/2020 of EA Decision.

In the present case, according to the Report, the companies involved engaged in resale price fixing practices (“RPM”), with which the participating retailers largely complied. Especially with regard to one company, it was additionally established that a contractual clause regarding the indirect prohibition of parallel imports was imposed in contracts with the network of authorized resellers. Therefore, the examined practices and contractual terms fall under the concept of “agreement”, namely the concept of a vertical agreement between companies operating at a different level in the distribution chain and fall within the scope of articles 1 par. 1 of Law 3959/ 2011 and 101 par. 1 of the TFEU. The above practices are capable of significantly affecting intra-Community trade, within the meaning of EU competition rules and, therefore, Article 101 TFEU is parallelly applied in the present case. At the same time, the conditions are met (in particular identification of object, products, participating parties, geographical area and applied methods) for the characterization of the examined practices as a single and continuous violation, while no individual exemption is understood based on articles 1 par. 3 of Law 3959/ 2011 and 101 par. 3 of the TFEU, based on the rationale of the Report.

The report of the Reporter P. Fotis is recommended to the Plenary Assembly of the EA, by virtue of par. 35 of the no. 704/2020 of the Decision of the Plenary of the EA, the acceptance, in accordance with its rationale, of the above-mentioned Dispute Settlement Proposals submitted by companies active in the import and trading markets of motorized hand tools and garden tools and the issuance of a decision by which the EA will:

– Finds that the parties involved violated Article 1 of Law 3959/2011 and 101 of the TFEU due to their participation in prohibited vertical partnerships by virtue of the practices that are briefly, in the context of the Dispute Settlement Procedure, described in the Report.

– Obliges the parties involved to cease, if they have not already done so, and to refrain in the future from the violations of articles 1 of Law 3959/2011 and 101 of the TFEU found in the Report.

– Imposes the fines for carrying out the findings in the Violation Report of Articles 1 of Law 3959/2011 and 101 of the TFEU.

It is noted that this Proposal concerns the first EA Dispute Settlement case where the alleged violations concern articles 1 of Law 3959/2011 and/or 101 of the TFEU in the context of vertical agreements, following the publication of Law 4886/2022 (Government Gazette A) 12/24.12.2022).

In any case, it is pointed out that the Recommendation is not binding for the Competition Committee, which will decide taking into account all the elements of the case file, according to no. 704/2020 EA Decision”.