The European Commission has fined Pierre Cardin and its largest licensee Ahlers a total of €5.7 million for breaching EU antitrust rules by restricting cross-border sales of Pierre Cardin-branded clothing, as well as sales of such products to specific customers.
The infringement
Pierre Cardin is a French fashion house that licenses its trademark to allow third parties to manufacture and distribute Pierre Cardin branded clothing. Ahlers was the largest licensee of Pierre Cardin clothing in the European Economic Area ('EEA') during the infringement.
The Commission's investigation found that, between 2008 and 2021, Pierre Cardin and Ahlers entered into anticompetitive agreements and engaged in concerted practices to shield Ahlers from competition in those EEA countries where the company held a Pierre Cardin licence, in breach of Article 101 of the Treaty on the Functioning of the European Union ('TFEU') and Article 53 of the EEA Agreement .
In particular, the Commission found that such anticompetitive agreements and concerted practices aimed at preventing other Pierre Cardin licensees and their customers from selling Pierre Cardin-branded clothing, both offline and online: (i) outside their licensed territories; and/or (ii) to low-price retailers (such as discounters) that offered the clothing to consumers at lower prices. The ultimate objective of such coordination between Pierre Cardin and Ahlers was to ensure Ahlers' absolute territorial protection in the countries covered by its licensing agreements with Pierre Cardin in the EEA.
These illegal practices prevent retailers from being able to freely source products in Member States with lower prices and artificially partition the internal market.
Fines
The fines were set on the basis of the Commission's 2006 Guidelines on fines . In setting the level of fines, the Commission took into account various elements, including the serious nature of the infringement, its geographic scope and its duration.
One of the parties submitted a claim for inability to pay the fine under point 35 of the 2006 Guidelines on fines, which the Commission thoroughly assessed. As a result, the Commission granted a reduction of the fine.
The breakdown of the fines imposed on each company is as follows:
Company |
Fine (€) |
Pierre Cardin |
2 237 000 |
Ahlers |
3 500 000 |
Total |
5 737 000 |
Background
Traders and retailers try to procure products in the internal market where the prices are lower and trade them to markets where prices are higher. This generally leads to price decreases in countries where prices are higher. Restrictions to such parallel trade can lead to the isolation of a national market whereby the manufacturer or supplier can charge higher prices to the detriment of consumers. They can also lead to less product diversity. Therefore, restrictions to parallel trade amount to non-regulatory barriers to a better functioning of the Single Market and are among the most serious restrictions of competition.
On 22 June 2021 the Commission carried out unannounced inspections at Ahlers' premises and opened formal proceedings into possible anticompetitive conduct by Pierre Cardin and Ahlers on 31 January 2022 . On 31 July 2023 , the Commission sent the parties a Statement of Objections.
Article 101 of the TFEU and Article 53 of the EEA Agreement prohibit agreements and concerted practices which may affect trade and prevent or restrict competition within the Single Market.
Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. These proceeds are not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.
Action for damages
Any person or company affected by anticompetitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court of Justice of the European Union and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision that has become final constitutes binding proof that the behaviour took place and was illegal. Even though the Commission has fined the cartel participants concerned, damages may be awarded by national courts without being reduced on account of the Commission fine.
The Antitrust Damages Directive makes it easier for victims of anticompetitive practices to obtain damages
