16 October 2018

Curtailing agent’s pricing policy by threatening contract termination is price fixing

The Amsterdam District Court recently ruled that Thomas Cook Nederland (TCN), the Dutch subsidiary of the well-known tour operator, engaged in resale price maintenance and breached the prohibition on restrictive agreements. The court held that by attempting to “punish” online travel agent Prijsvrij for providing substantial discounts to customers, culminating in ending the agency agreement between TCN and Prijsvrij, TCN infringed the Dutch equivalent of article 101 TFEU.

TCN was found to have retaliated, in several ways, against Prijsvrij in response to the low prices Prijsvrij was offering to online consumers. When renewing its agreement with Prijsvrij, TCN offered Prijsvrij a lower commission than had been offered to other agents who did not offer the same high discounts to consumers. TCN also agreed with another travel agent (which also had an agency agreement with Prijsvrij) to pay less commission to online retailers that offered structural discounts to their customers; a measure which specifically affected Prijsvrij. In addition, TCN had voiced its dissatisfaction about large discounts offered by online players in various publications during the same period. Moreover, around the time the agency agreement was terminated, TCN had manipulated its own online content in such a way that consumers were offered a higher price when consulting Prijsvrij than when consulting TCN or its partner D-Reizen – while D-Reizen was also starting to invest in its own online presence. TCN’s policy eventually led to the termination of the agency agreement with Prijsvrij.

In its defence, TCN stated that the termination of the agency agreement was not related to any price-fixing, but was due to decreasing margins generated by Prijsvrij compared to other agents. However, the court held that TCN did not sufficiently substantiate this with objective facts and figures, while Prijsvrij provided evidence that it had in fact improved its results each year. More importantly, TCN failed to dispute that its strategy was aimed at preventing agents from offering discounts, whereas e-mail correspondence provided by Prijsvrij showed that TCN’s objective was, in reality, to implement a commission level which depended on whether or not a discount was granted to end customers. The court found that TCN specifically targeted Prijsvrij in its attempts to curtail discounts granted by agents in order to prevent prices from falling below a certain level. The court therefore ruled that terminating the agency agreement with Prijsvrij could be interpreted as engaging in prohibited vertical price-fixing, and the termination was therefore null and void. This judgment once again demonstrates that suppliers should be careful not to engage in resale price maintenance.