Fines for price fixing on sunflower oil market

In the second half of July 2013 the Competition Protection Commission closed two files and imposed penalties on the suppliers and distributors of sunflower oil for end consumption in Bulgaria for resale price maintenance.

Both files were opened in a sector inquiry of the Bulgarian markets of sunflower and sunflower oil, which was completed in June 2012. During the inquiry the commission found retail price maintenance provisions in some distribution agreements. The commission immediately started investigations against Zvezda AD (supplier) and KOOP Commerce and Tourism (distributor), as well as Kaliakra AD, Bunge Zrt Hungary, Bunge Romania Srl (suppliers) and their distributors.

In the first investigation the commission established that the distribution agreements contained obligations for the distributor to consider the price policy of the supplier and its price lists. Further, the distributor was not allowed to resell the goods under the minimum resale price announced officially by the supplier. If the distributor failed to fulfil the obligations, the supplier could terminate the agreement unilaterally. In addition, the distributor owed an indemnity to the supplier if the first one distributed the goods under the minimum price fixed by the supplier. In 2009 the distribution agreement was amended. According to the amendments, the distributor is no longer obliged to apply the supplier's resale prices. However, the distributor is still obliged to consider and follow the price supplier's price policy. Moreover, the supplier is allowed to amend the resale prices of its distributors. These obligations were considered by the commission as resale price maintenance which infringed competition on the market for sunflower oil for end consumption in Bulgaria. In this case the supplier and distributor were fined approximately €50,000 each.

In the second file, the commission imposed a total fine (for suppliers and distributors) of approximately €1 million. In this case, the commission found resale price maintenance mechanisms by appointment of fixed prices for each distribution level in the distribution agreements. The agreements envisaged discounts as incentives for preservation of the fixed-price level. Further, the non-fulfillment of the resale price maintenance mechanism was sanctioned with the unilateral termination of the agreement by the suppliers and cutting the additional discounts for the distributors. This is why the commission found that the distribution had harmed competition on the market for sunflower oil for end consumption in Bulgaria.

For further information on this topic please contact Ilko Stoyanov or Mariya Papazova at Advokatsko Druzhestvo Andreev Stoyanov & Tsekova in cooperation with Schönherr Rechtsanwälte GmbH by telephone (+359 2 933 1072), fax (+359 2 986 1105) or email (i.stoyanov@schoenherr.bg or m.papazova@schoenherr.bg).