Lladró Comercial SA: price-fixing agreements
| Case Outcome | CA98 - infringement Chapter I |
| Case Number | CA98/04/2003 |
| Date | 31 March 2003 |
| Decision Date | 31 March 2003 |
| Subject Matter | CA98 and civil cartels |
| Court | Competition and Markets Authority (EW) |
Competition Act 1998
Decision of Director General of Fair Trading
No. CA98/04/2003
Agreements between Lladró Comercial SA and UK retailers fixing the
price of porcelain and stoneware figurines
31 March 2003
(Case CP/0809-01)
SUMMARY
The Director General of Fair Trading has concluded that Lladró Comercial S.A., a
producer of luxury porcelain and stoneware figurines, and each of the retailers listed at
Annex 1 have infringed the Competition Act 1998 ('the Act') by entering into bilateral
price-fixing agreements.
The majority of the agreements were entered into in 1999 and remain in force today.
They affect trade within the UK and have as their object the appreciable prevention,
restriction or distortion of competition in the UK in breach of the Chapter I prohibition
imposed by section 2 of the Act.
Agreements between undertakings which have as their object or effect the fixing of
prices are serious infringements of the Chapter I prohibition. This Decision requires
Lladró Comercial S.A. and each of the retailers listed at Annex 1 to remove the price-
fixing clauses from each agreement as appropriate within 20 working days from the
date of this Decision.
For the reasons set out in this Decision no financial penalty is imposed on any party to
the agreements.
Office of Fair Trading 1
TABLE OF CONTENTS
I THE FACTS ........................................................................................3
A Background .....................................................................................3
B The Director's investigation ...............................................................5
C Parties to the Agreements .................................................................5
D Products covered by the Agreements ..................................................6
E Scope and duration of the Agreements ................................................7
F Notification by Lladró Comercial of the Agreement to the European
Commission .....................................................................................9
G Discounting of Lladró and Nao figurines: evidence from retailers ...........10
II LEGAL AND ECONOMIC ASSESSMENT................................................14
A Introduction ...................................................................................14
B The relevant market ........................................................................14
C Market share.................................................................................. 18
D The Chapter I Prohibition .................................................................19
E Appreciability .................................................................................31
F Effect on trade within the UK ...........................................................31
G Exclusion....................................................................................... 31
H Exemption .....................................................................................32
I EC comfort letter ............................................................................33
III DECISION......................................................................................... 34
IV ACTION ...........................................................................................35
A Directions ......................................................................................35
B Financial penalties ..........................................................................36
Office of Fair Trading 2
I THE FACTS
A Background
1. Following his receipt of complaints from three independent UK-based retailers,
the Director General of Fair Trading ('the Director') began an investigation under
the Competition Act 1998 ('the Act') to determine whether selective distribution
agreements concluded between Lladró Comercial S.A. ('Lladró Comercial'), a
manufacturer and supplier of porcelain and stoneware figurines ('Lladró
merchandise'), and certain UK-based retailers breached the prohibition set out in
section 2(1) of the Act ('the Chapter I prohibition').1 Each of the complainants
alleged that Lladró Comercial had terminated supplies upon its discovery that
Lladró merchandise had been offered for sale by the retailer below recommended
retail prices.
2. References in the remainder of this Decision to 'the Agreement' or 'the
Agreements' are to the standard form selective distribution agreements entered
into separately by Lladró Comercial with each of the retailers set out in Annex 1.
The complaints
3. On 20 March 2000, a UK retailer of Lladró merchandise informed the Director of
its view that Lladró Comercial had ceased supplies of Lladró merchandise on the
grounds (inter alia) that it had been discounted.2 On 2 June 2000, the Director
wrote to Lladró Comercial's wholly owned UK subsidiary, Lladró (UK) Limited
('Lladró (UK)'), inviting it to comment on the complaint. By letter of 14 June
2000 Lladró Comercial denied the allegation and informed the Director of the
importance which it attached to maintaining the luxury status of Lladró
merchandise and of the measures which it had taken to maintain that status.
Lladró Comercial expressed the view that it was this preoccupation which had
resulted in the termination of supplies to the retailer. At the same time, Lladró
Comercial stated:
1 Unless exempted or excluded in accordance with the provisions of Part I of the Act, the
Chapter I prohibition prohibits agreements between undertakings, decisions by associations of
undertakings or concerted practices which may affect trade within the UK and which have as
their object or effect the prevention, restriction or distortion of competition wit hin the UK.
2 In accordance with section 56(2) of the Act, the Director has decided not to disclose the
identity of the retailer in this Decision on the grounds that to do so would be contrary to the
public interest. The Director bases that decision on his belief that disclosure of the complainant's
identity would have the likely effect of discouraging informants from coming forward in similar
circumstances in the future.
Office of Fair Trading 3
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