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Germany imposes fines on manufacturers and retailers of musical instruments

Christian Fernsby |
The Germany's national competition regulator has imposed fines totalling approx. 21 million euros on three manufacturers and two retailers of musical instruments and on staff responsible.

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The manufacturers and retailers are accused of resale price maintenance and the retailers also of agreeing on horizontal price-fixing in several cases.

The manufacturers (respectively their distributors) are Yamaha Music Europe GmbH, Rellingen, Roland Germany GmbH, Rüsselsheim and Fender Musical Instruments GmbH, Düsseldorf. The retailers are Thomann GmbH, Burgebrach and MUSIC STORE professional GmbH, Cologne.

The proceedings were initiated in April 2018 with a dawn raid following tip-offs from market participants.

Andreas Mundt, President of the Bundeskartellamt: “For years manufacturers and retailers of musical instruments have systematically endeavoured to restrict price competition for the end consumer. The manufacturers asked at least the leading specialist retailers Thomann and Music Store not to undercut fixed minimum sales prices, which they did in many cases. In addition, in individual cases the retailers agreed among one another on price increases for individual products.

With the fines it has imposed the Bundeskartellamt is sending a clear signal not just to the companies concerned but also to the entire musical instrument sector that violations of the prohibition of resale price maintenance and price-fixing agreements will not be tolerated.”

Manufacturers and retailers agreed to comply with the minimum sales price requirements set by the manufacturers. If the minimum sales prices were undercut, staff responsible at Yamaha, Roland and Fender would on several occasions contact Thomann and Music Store and ask these retailers to adjust their sales prices, which they also did in many cases.

To some extent Yamaha and Roland also used price tracking software to monitor end consumer prices. In individual cases the manufacturers threatened the retailers with or even imposed penalties such as a suspension of supply or a worsening of terms and conditions. However, there was no or only sporadic enforcement or monitoring of the minimum sales prices requested for some products.

The retailers often did not comply with the requirements either by not implementing them or avoiding them, e.g. by bundling several products in an overall price.

At the same time in complaints addressed to Yamaha, Roland and Fender the retailers Thomann and Music Store demanded that other specialist musical instrument retailers observe the minimum prices. This was partly in reaction to complaints that their own prices were too low.

In the course of the proceeding concerning resale price maintenance, indications emerged of horizontal price-fixing agreements between the specialist musical instrument retailers Thomann und Music Store. Between 21 December 2014 and 27 April 2018 these had agreed to price increases for individual musical instruments or additional products in thirteen cases.

In setting the fine the Bundeskartellamt took into account that Yamaha, Roland, Fender, Thomann and Music Store had cooperated extensively with the authority in uncovering the agreements (Music Store only in the proceeding concerning resale price maintenance) and that a settlement could be reached. The orders imposing the fines are final.

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