technology

Philips, Asustek Said to Face EU Fines Soon for Web Price Curbs

  • EU was investigating manufacturers for limiting internet sales
  • Case also targets algorithms used to align online prices

Royal Philips NV and Asustek Computer Inc. are among companies set to be fined by the European Union for preventing online retailers from setting prices that undercut traditional outlets, according to two people familiar with the case.

The European Commission is expected to announce the fines within weeks, said the people, who asked not to be named because the EU fines aren’t yet public. While the decision is expected before the EU’s August summer break, the timetable could slip, said the people.

Companies involved may receive substantial reductions for cooperating with regulators, the people said. The case is the first of several investigations into manufacturers’ efforts to prevent online retailers undercutting offline stores.

Denon & Marantz, owned by Sound United LLC, and Pioneer Corp. were also targeted by the probe into how online retailers might be unable to set their own prices for popular consumer electronics such as household appliances, notebooks and hi-fi equipment. Pricing software that automatically adjusts prices to those quoted by rivals could have aggravated the companies’ actions, the EU said last year. The software may create a uniform price effect that discourages mavericks offering much lower prices.

Anticipated Fine

Asustek Chief Financial Officer Nick Wu broke the silence over the case at an earnings conference call from Taipei last month, saying that he anticipates a fine of 65 million euros ($77 million.)

"That amount is significant, but that is also something that we have to accept," Wu said. The company plans to improve training to make sure staff don’t breach EU competition rules and "we don’t think such an incident will occur ever again."

Philips declined to comment. Sound United and Pioneer didn’t respond to requests for comment.

More than two in five retailers face some sort of price recommendation or restriction from manufacturers, the EU said in a 2016 report. The digital economy is a focus for EU antitrust chief Margrethe Vestager who has already fined Google over an online shopping search tool. The EU is also probing brand names including Universal Studios and Nike Inc. over licensing and distribution curbs that might restrict traders from selling merchandise outside one country or online.

Philips, Samsung Electronics Co. and Metro AG’s Media-Saturn were raided by antitrust officials in 2013 over concerns they were unfairly restricting online sales of consumer electronic products. The EU also raided Metro’s Redcoon in 2015.

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