Danish Competition Appeals Tribunal: Hugo Boss' information exchange was unlawful

Background

Hugo Boss had been exchanging sensitive information with Kaufmann in the period from January 2014 to November 2017 and with Ginsborg in the period from December 2014 to April 2018. The information consisted, among other things, of prices, discounts, outlets and volumes at reduced prices.

The market is characterised by dual distribution, which is also the case here, as Hugo Boss is acting as wholesaler to Kaufmann and Ginsborg while at the same time selling clothes directly to consumers from own stores.

The Competition Appeals Tribunal's rulings

The Competition Appeals Tribunal acknowledges that vertical business partners may exchange information, including in connection with purchase and production agreements. However, the information exchanged did not exclusively concern Hugo Boss' production level but also Hugo Boss' retail business, which means that the exchange through the latter partly also constituted horizontal cooperation. The result was that the Competition Appeals Tribunal considered it to be an exchange of information between competitors, which constituted concerted practices contrary to the competition rules.

According to the Competition Appeals Tribunal, it had no significance that the exchange only took place from Hugo Boss to the distributors, and not the other way around, because the distributors were found to have accepted the information and adjusted their market conduct accordingly. Besides, the information was given partly on request from the distributors.

The majority of the Competition Appeals Tribunal found that the information exchange had as its object the restriction of competition, so it had no significance whether the exchange actually had an appreciable impact on the market, e.g. in the form of lower discounts or increased coordination of clearance sales to the detriment of consumers. However, a minority found that, due to the actual and original "vertical nature" of the agreement, it could not just be assumed that the agreement could be assessed without involving the vertical aspect and, therefore, that it could not be deemed to just be horizontal.

Therefore, according to the minority, it was not sufficient to just look at the information exchange as being horizontal between competitors; instead the "dualistic elements" had to be considered - i.e. that it was primarily a vertical relationship. It had not been done in a manner that constituted a sufficient basis for establishing a restriction "by object". Such restriction is characterised by the fact that, by its nature, it is anti-competitive to such an extent that it does not require a more detailed analysis to establish the restriction. The opinion given by the minority seems to be based on recent European case law, according to which it is necessary to have a sufficient basis for establishing a restriction by object.

The cases have now been referred to the State Prosecutor for Serious Economic and International Crime with a view to criminal prosecution.

Manufacturers need to be highly attentive

The decisions show that a company which is active at different levels in the chain of distribution must pay special attention when exchanging information with customers if the company also competes with such customers in the same market (so-called "dual distribution").

Read our previous news article on the Competition Council’s decision.

Read the Competition Appeal Tribunal's rulings

Exchange of information between Hugo Boss and Kaufmann (in Danish)

Exchange of information between Hugo Boss and Ginsborg (in Danish)