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Competition & EU law insights

Keeping you up to date on Competition & EU law developments in Europe and beyond.

| 1 minute read
Reposted from Bird & Bird Insights

European Commission dawn raids the fashion sector again

Some industries are more vulnerable to cartelisation – and thus face higher exposure to antitrust enforcement – than others. Those most prone to antitrust practices are former monopolistic markets like energy or telecoms, but also markets trading in homogenous products such as cement or chemicals.

It is thus particularly interesting to see the European Commission’s actions in the fashion industry. There has been three fashion-related dawn raids in the last three years (June 2021, May 2022 and April 2023).

Given that fierce competition in the fashion industry takes place at all dimensions (price, quality, choice), the manufacturer is tempted to impose vertical price or territorial restrictions on its distributors.

Hence, two scenarios are possible:

  • for some peculiar reason, the fashion industry does not seem to fit the pattern according to which only oligopolistic markets where homogenous products are traded face the increased risk of cartelisation (if these are cartels which the Commission is looking after),
  • the Commission became pluckier when reaching out to its investigative toolkit as the inspections had been usually used to detect cartels (if the Commission suspects vertical restrictions).

Unfortunately, we know very little about any of these three cases. In none of its communications did the Commission reveal the identity of the inspected companies – in relation to the inspection conducted in 2021 we only know that this was carried out with the assistance of German competition authority officials.

Therefore, there is also a third option on the table, namely that the European Commission’s suspicions were unfounded, and no infringement took place.

On 18 April 2023, the European Commission has started unannounced inspections at the premises of companies active in the fashion industry in several Member States. In parallel, the Commission has sent out formal requests for information to companies active in the same sector.

Tags

retail, consumer, investigations, surprise investigation, fashion sector, fashion industry, dawn raid fashion, competition law, antitrust, competition and eu law, retail & consumer, europe