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Clarifying Resale Pricing: A Brief Review of The Latest Romanian Competition Council Guidelines

Clarifying Resale Pricing: A Brief Review of The Latest Romanian Competition Council Guidelines

Romania’s Competition Council published  on July 31, 2023 guidelines pertaining to the maximum resale prices that could be established in retail markets (‘ORIENTĂRI CU PRIVIRE LA PLAFOANELE MAXIMALE ALE PREȚURILOR DE REVÂNZARE CE POT FI STABILITE PE PIEȚELE DE RETAIL’). The guidelines are intended to help suppliers and retailers understand when it is permissible to impose a maximum resale price and when it is not.

The Competition Council, in its document, laid out clear-cut rules for vertical agreements, which encompass agreements between suppliers and retailers within a distribution chain. While these agreements can help boost mutual benefits within the supply and distribution pipeline, the Council emphasized that companies must independently establish their market behavior, with any restrictions on a retailers’ ability to set their sales price viewed as competition infringements.

The Competition Council emphasized the liberty of retailers to set their selling prices, with suppliers allowed only to suggest non-binding recommended retail prices. This approach nurtures fair competition among retailers while ensuring consumers enjoy the best price for offered services. Suppliers, according to the guidelines, are forbidden from wielding substantial influence over retailers’ sale prices. However, Suppliers can impose a maximum resale price, but combining this with incentives to maintain a specific price level or discourage price reduction can be perceived as a severe restriction of competition.

The Competition Council elucidated that, during a supplier-led promotional campaign, temporary use of a maximum resale price could serve to pass on the benefits of lower prices to end consumers. However, enforcing a maximum resale price within a promotional campaign, aimed at passing on a distribution chain discount, should not limit retailers’ ability to offer additional discounts.

The guidelines also shed light on indirect price-fixing examples, including imposing fixed commercial markups, setting a maximum discount, compelling retailers to obtain manufacturers’ agreement to revise their prices, and intimidating or pressuring retailers to discourage discounts.

In conclusion, these guidelines by Romania’s Competition Council provide a clearer understanding regarding the vertical arrangments for fostering healthier competition and improving consumer well-being in Romania’s retail markets. However, the Competition Counci laid out that the ‘competition policy does not aim to address rising inflation in the short term, nor does the power to market is unlikely to be the key driver of the current inflationary trend’.