Fashion brands fined over EU antitrust breaches

Gucci, Chloé and Loewe were hit with a combined total of more than €157 million in fines by the European Commission after breaching EU competition rules on price restrictions.

An investigation by the Commission found the fashion brands had restricted the ability of independent third-party retailers to set online and offline prices for their products over several years, limiting opportunities for competition, increasing prices, and reducing choice for consumers.

The companies, acting independently of each other, monitored retail prices of third-party resellers and made retailers deviating from proscribed prices follow the set requirements.  The retailers were required to adhere to recommended retail prices, cap discounts, and follow specific sale periods. At times, discounts were prohibited altogether. Gucci, Chloé and Loewe aimed to make sure independent third-party resellers used the same prices and sales conditions as the fashion companies did in their own stores.

The pricing restrictions applied to nearly the entire range of products created and marketed by Gucci, Chloé, and Loewe under their respective brand names, encompassing clothing, leather goods, footwear, and fashion accessories. These infringements extended across the entire European Economic Area (EEA).

The Commission found the retailers in general adhered to the companies' pricing policies, either from the start or after being requested to do so. The move limited competition opportunities for rivals, while also allowing Gucci, Chloé and Loewe to protect their own sales from competition.

Gucci – which began the practice in 2015, four years ahead of the other two - also imposed online sales restrictions on a specific product line by asking its retailers to stop selling it online. 

Gucci was hit with the largest fine of the three, €119.6m, with Chloé fined €19.7m and Loewe €18m.  All three fashion companies had their fines reduced from the original amount after cooperating with the investigations – with Gucci and Loewe seeing their original fines halved for providing evidence with significant added value at an early stage of the Commission investigation.  Gucci also revealed an infringement of EU competition rules not yet known to the Commission.

“This is the highest fine ever imposed for an RPM infringement of EU competition law, even with penalty discounts for cooperating with the Commission's antitrust investigation, and highlights non-compliance risk in the retail sector both in online and offline sales channels,” said Tadeusz Gielas, a competition law expert at Pinsent Masons.

“It's notable that the three fashion houses did not collude with each other and carried out their respective RPM arrangements independently of each other, so the arrangements concerned individual vertical agreements, but would often involve the same high-end retailers that sold the luxury products of each brand.”

The investigations began on 18 April 2023 with Commission inspectors making unannounced visits to the companies’ bases across the EU.

“In Europe, all consumers, whatever they buy, and wherever they buy it, online or offline, deserve the benefits of genuine price competition,” said Teresa Ribera, the Commission’s Executive Vice-President for Clean, Just and Competitive Transition - head of EU competition policy and enforcement - after the ruling against the fashion houses.

“This decision sends a strong signal to the fashion industry and beyond that we will not tolerate this kind of practices in Europe, and that fair competition and consumer protection apply to everyone, equally.” 

Paul Williams, competition law expert with Pinsent Masons, said that the nature of the monitoring by the trio had similarities with other cases both in the EU and in the UK. “It is important that suppliers are clearly aware that such pricing practices are incompatible with competition law,” he added.

Gielas said: “This case was self-initiated by the Commission, rather than relying on a complaint, whistleblower or leniency application - which is the basis for most of the Commission’s cases involving anticompetitive agreements. It suggests that the Commission may be seeking to more proactively target anticompetitive practices using its own detection tools and techniques”.