Discount Demands and Antitrust Law
Germany“s Federal Cartel Office, the Bundeskartellamt, has thrown its weight behind suppliers faced with demands for excessive discounts, and a furniture store chain has had to come to terms with limitations being imposed on its demands by antitrust law.
Businesses are not allowed to abuse their market power and put pressure on their suppliers as a means of obtaining undue advantages for themselves. That was the verdict of Germany“s Federal Supreme Court – the Bundesgerichtshof („BGH“ for short) – with respect to so-called „Hochzeitsrabatte“ (wedding discounts). A supermarket chain had demanded discounts and other perks from its suppliers following its acquisition of numerous stores from a discount supermarket. We at the commercial law firm MTR Rechtsanwälte can report that in a ruling from January 2018, the BGH held that, in doing so, the company was abusing its market power (Az.: KVR 3/17).
A similar situation arose concerning a furniture store chain. In this case, the Bundeskartellamt was able to persuade the chain to back away from its blanket demand for an anniversary discount from its suppliers – potentially a violation of antitrust law. Instead, the discounts have now been negotiated individually with each supplier.
As indicated by the Bundeskartellamt on February 27, 2020, the original demands for a special discount from small and medium-sized furniture manufacturers potentially amounted to abuse. It noted that even though discounts of this kind are not prohibited as a rule, the suppliers that are dependent on their supply relationship with the furniture store chain needed to be offered appropriate consideration, e.g. in the form of additional exhibition space or a performance guarantee. The cartel office went on to state that in particular small and medium-sized enterprises are meant to be protected by the so-called „Anzapfverbot“, i.e. the prohibition on demanding unjustified benefits from suppliers, thus ultimately maintaining variety for consumers.
The furniture store chain has since replaced its demand for a blanket discount with individually negotiated anniversary discounts with its suppliers. According to the Bundeskartellamt, this has resulted in discounts that are on average significantly lower than what was originally demanded. It also reported that arrangements had been concluded regarding consideration.
The arrangements were all submitted to the Bundeskartellamt, which did not raise any further concerns. Accordingly, the cartel office will not be passing any further judgment on the original discount demands.
Businesses must not abuse their market power, as such behavior can easily constitute a violation of antitrust or competition law. Violations of this kind may be met with severe penalties. Lawyers with experience in the field of antitrust law can offer advice.
For more information:
https://www.mtrlegal.com/en/legal-advice/antitrust-law.html
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