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ZEG to Pay Millions in Fines for Price-Fixing

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BONN, Germany – Germany’s national competition authority (Bundeskartellamt) announces that it has imposed an over ten million euro fine on the Cologne-based dealer cooperative Zweirad-Einkaufs-Genossenschaft eG (ZEG). According to a Bundeskartellamt press release, the imposed fine took into account that ZEG cooperated by clarifying its dealer agreements. Therefore, the proceedings concluded through a fine’s settlement.

ZEG to Pay Millions in Fines for Price-Fixing
Bundeskartellamt: ZEG’s representatives actively checked whether dealers adhered to the fixed sales prices. – Photo Bike Europe

The fines are imposed on the ZEG and its representatives for vertical price-fixing at 47 of its affiliated member/dealers. The total fine amounts to 13.4 million euro.

Triggered by trade tip-off

The Bundeskartellamt proceedings against ZEG were triggered by a trade tip-off. What in particular matters for ZEG in the settlement agreement is that its 47 affiliated dealers are safeguarded for further measures “Due to their secondary role in the matter in comparison to ZEG. They are therefore not accused of having committed a cartel offence.”

They received complaints from dealers about other retailers

Raid on ZEG’s HQ

Subject of the proceeding were agreements between ZEG representatives and 47 (German) affiliated retailers. According to these agreements the retailers were not allowed to undercut the minimum sales prices (referred to as “low price”) set by ZEG for specific models. These are bikes of ZEG’s own brands as well as special models of supplying manufacturers sold exclusively through ZEG’s affiliated member/dealers. Some of these dealer agreements date back to February 2007 – and ended with an early morning police raid on ZEG’s HQ in February 2015.

No price undercutting

According to the Bundeskartellamt, ZEG’s representatives actively checked whether dealers adhered to the fixed sales prices. “They received complaints from dealers about other retailers undercutting the prices. It prompted ZEG to conduct its own price research or had this carried out by others. Retailers that undercut the fixes prices were asked to strictly observe the set price.

“ZEG agreed with its suppliers on retail prices for certain bicycle models. The independent retailers were asked not to undercut the minimum sales prices set by ZEG for certain bicycle models. This greatly restricted price competition between the ZEG member/dealers to the detriment of the consumer. Although short-term resale price setting is allowed under German and European law for dealer cooperatives like ZEG, e.g. for joint special offer campaigns, the measures taken in this particular case far exceeded what is permissible and have created a situation similar to a sales cartel among the participating retailers”, says Bundeskartellamt President Andreas Mundt in the press release.

ZEG’s dominant role

Last but not least and for a better understanding of ZEG’s dominant role on its domestic market; the dealer cooperative has some 670 members retailers located in Germany. They are included in a total affiliated membership of about 960 independent retailers in Europe. ZEG sells bicycles and e-bikes under its own brand names (Bulls, Flyer, Hercules, Pegasus, Zemo) as well as special models of other manufacturers which are sold exclusively by ZEG.

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