Samsung is facing a hefty fine in the Netherlands for allegedly inflating the prices of its TVs. The Netherlands Authority for Consumers & Markets (ACM) has determined that the Korean company unfairly influenced the prices that online retailers charged for its TV sets. It pressurized the retailers to raise prices, causing customers to pay more.
This practice went on for six years from January 2013 through December 2018. During this period, Samsung influenced the sales prices of at least seven online retailers. The Dutch watchdog has imposed a fine of more than €39 million on the company.
“Under the guise of ‘price advice’, Samsung made sure that the retailers raised their prices to the market price desired by Samsung,” ACM Chairman Martijn Snoep said in a statement. “Samsung’s behavior distorted competition at the retail level and led to higher prices for consumers.”
Samsung allegedly inflated the prices of its TV sets in the Netherlands
Like most other electronics, televisions also quickly fall in prices a few months after their launch. That’s because new and better models have arrived by then at the same price. Competition among retailers also causes the prices to drop. However, a reduced sale price means a smaller profit margin for both the manufacturer as well as the retailers.
To stop that from happening, Samsung coordinated the prices with retailers and kept them at the desired margin. In its findings, ACM stated that the Korean firm regularly monitored the prices retailers are charging for its TVs. If any retailer lowers the price, it contacted them and “advised” them to increase the price. It would say that “all other partner parties have been advised” likewise.
Since all retailers will be following Samsung’s pricing, no retailer would price themselves out of the market. This also ensures a healthy profit margin for both parties. A win-win situation, with customers on the losing end.
However, by doing this, “Samsung intervened in an unauthorized way directly on the competition between the retailers,” ACD said. While a manufacturer is within the right to monitor the online sales prices of its products or even provide non-binding price advice to retailers, “each retailer must set its own selling prices,” the regulators added.
As such, Samsung has violated the regulations by urging retailers to increase prices as it desired. It is now facing a fine of more than €39 million for its actions.
Samsung, however, will challenge ACM’s decision and is planning legal action, Dutch publication De Telegraaf reports. We will have to wait and see how this case develops.