Six Million Euro Fine for Sennheiser: A Case of Illegally Fixed Prices
Overview
Unlawful Deals: Sennheiser Faced with Millions in Penalties Due to Their Infringements - Sennheiser faces a hefty $1 million penalty for undisclosed violations
Germany's Federal Cartel Office has handed down a staggering €6 million fine to Sennheiser electronic SE & Co. KG, a renowned manufacturer of premium headphones, and its subsidiary Sonova. The fine stems from the companies' involvement in anticompetitive practices, specifically price-fixing, damaging consumer interests over a considerable period [1][2].
The Mechanics of Price-Fixing
- Price Surveillance: Sennheiser kept a close watch on consumer prices, utilizing price comparison websites and specialized software. Retailers found to be selling below the suggested retail price (RRP) were targeted for coercion [1].
- Retailer Compliance: Upon Sennheiser's intervention, affected retailers typically adjusted their prices, leading to higher costs for end consumers [1].
- Secretive Communication: Bundeskartellamt unveiled the use of coded language by Sennheiser employees in their internal conversations regarding these price maintenance activities [1].
The Cartel Office's Perspective
The Bundeskartelamt highlights that while horizontal agreements between manufacturers or retailers are often associated with stifled price competition, vertical agreements (between manufacturers and their retailers) also pose a significant threat to consumer interests [1].
Regulatory Findings and Official Statements
- Training and Concealment: Andreas Mundt, the president of the Bundeskartellamt, stated that Sennheiser provided antitrust training to its employees, but this knowledge was employed to conceal, rather than prevent, anticompetitive behavior. Mr. Mundt emphasized, "Companies must not only adopt compliance measures but also put them into practice" [1].
Consequences and Penalties
- Total Fine: The total fine on Sennheiser and Sonova amounts to nearly €6 million. The fine reflected the companies' cooperation during the investigation [1][2].
- Individual Penalties: Besides the corporate fines, three Sennheiser employees have also been penalized individually [1].
Impact
An extended period of restricted price competition for premium headphones in Germany was the unfortunate consequence of Sennheiser's activities, leading to increased costs for consumers [1][2].
- The six million euro fine imposed on Sennheiser and Sonova by Germany's Federal Cartel Office stems from their participation in anticompetitive practices, specifically fixing prices within the industry.
- To maintain prices, Sennheiser monitored consumer prices using price comparison websites and specialized software, targeting retailers selling below the suggested retail price for coercion.
- Upon Sennheiser's intervention, retailers typically adjusted their prices, resulting in higher costs for end consumers.
- The Bundeskartellamt underscored that while horizontal agreements pose a threat to competition, vertical agreements between manufacturers and retailers can also harm consumer interests, as seen in the Sennheiser case.
