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Danish Competition Council against Witt Hvidevarer

24. november 2010

On 24th of November 2010 The Danish Competition Council (DCC) adopted a decision finding that Witt Hvidevarer A/S (“Witt”) has taken part in actions that conflict with TEUF art. 101(1) and the corresponding provision in section 6 in the Danish Competition Act.

Documents from a dawn raid, conducted in august 2009, reveal that Witt has entered into agreements with Danish retailers on resale price maintainance and into agreements and concerted practices on restricting parallel trade of vacuum cleaning robots from the American company iRobot Corporation.

Witt has not employed a general agreement with provisions on retail price maintainance, however, evidence from the dawn raid shows that Witt has monitored retail prices for their vacuum cleaners and contemplated initiatives to ensure an appropiate retail price level. This includes initiatives to avoid retailers reselling the products to other retailers thus creating price competition at the distribution level. In some cases Witt has contacted the retailers and has expressed dissatisfaction with their prices. Documents from the dawn raid reveal a number of cases where this contact has resultet in agreements on maintaining a specific retail price level. In a few cases Witt has sanctioned retailers’ price behaviour which does not correspond with Witts wishes. The sanctions include reduction of general rebates and the setting of extra high buying targets in order to obtain bonus.

Furthermore, Witt has entered into a standard distribution agreement with iRobot Corporation which has been adapted to the Scandinavian markets. Witt has been appointed as an exclusive distributor for the resale of iRobot-products to Denmark, Norway, Sweden and Finland (“the Territory”). The agreement contains provisions that prohibit distributors from active as well as passive selling to customers and purchasers outside their Territory.

Moreover, documents from the dawn raid reveal a mail correspondence between Witt, iRobot, iRobot-distributors from other countries and Danish retailers on concerted practices on how to stop low-price parallel import into Denmark. The correspondence comprise cooperation on buying of samples of products, tracking down serial numbers in order to identify the source of supply and contact the parallel trader and his suppliers in order to put pressure on them to stop the parallel trade.

Hence, the DCC reached the conclusion that Witt’s agreements with Danish retailers on retail price maintenance, the distribution agreement with iRobot Corporation and Witt’s concerted practises on hindrance of parallel imports restrict competition by object and infringe TEUF art. 101(1) and the corresponding section 6 in the Danish Competition Act. The restrictions constitute hard-core restrictions of competition and thus fall outside the scope of the vertical block exemption. The DCC also found that the conditions for an exemption according to TEUF art. 101(3) and according to the corresponding provision in section 8 in the Danish competition Act were not fulfilled.