The European Commission has given fashion retailer Guess a fine worth almost 40 million euros (39,821,000 to be precise). The US company got the fine for restricting retailers from online advertising and selling cross-border to consumers in other EU countries. This is called geo-blocking and in breach of European competition rules.
The European Commission announced the fine on its website yesterday. According to commissioner Margrethe Vestager, the distribution agreements of Guess tried to prevent EU consumers from shopping in other member states. The US company did this by blocking retailers from advertising and selling cross-border.
‘Guess maintained artificially high prices’
“This allowed the company to maintain artificially high retail prices, in particular in Central and Eastern European countries. As a result, we have today sanctioned Guess for this behavior”, Vestager stated. In June of 2017, the EU started the investigation into the distribution agreements and practices of Guess.
‘Consumers are free to shop online at any authorized retailer’
The Commission explained that consumers must be free to shop online at any retailer that’s authorized by a manufacturer, including shops that are across national borders. And these authorized shops must be free to offer the products that are covered by the distribution contract, to advertise and sell them cross-border, and to set their resale prices.
Guess was able to divide the European market into parts. For example, in Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, the retail prices of Guess products were on average 5 to 10 percent higher than in Western Europe.
The Guess case complements the European geo-blocking rules that entered into force at the beginning of this month.