EU Regulator Probes Pierre Cardin for Anticompetitive Practices
On July 31, the European Union’s antitrust regulators sent a formal Statement of Objections to the renowned French luxury fashion house, Pierre Cardin, and its licensee, Ahlers over its distributions and licensing practices.
The European Commission’s preliminary view suggests that both entities might have contravened EU antitrust rules through their alleged activities that restricted cross-border sales of Pierre Cardin-licensed clothing and sales to specific customers.
“Consumers in the EU must be able to shop around for the best deals. Our concern is that the licensing and distribution practices of Pierre Cardin and Ahlers, its largest licensee, may have prevented consumers from benefiting from lower prices and a greater choice of clothing”. Margrethe Vestager, Executive Vice-President in charge of competition policy
The European Commission’s official statement reveals that the concerns stem from the potential breach of antitrust regulations which prohibit agreements between companies that hinder competition within the EU’s Single Market. The Commission’s assertion is that Pierre Cardin and Ahlers may have been involved in anticompetitive agreements and coordination practices, aiming to limit the ability of other Pierre Cardin licensees and their customers to engage in sales activities both offline and online. The focus of this restriction encompassed the European Economic Area (EEA) licensed territories of Ahlers, the largest licensee of Pierre Cardin clothing in the region.
A key aspect of the allegations pertains to the manipulation of the clothing distribution and licensing practices for Pierre Cardin products. The Commission claims that this concerted effort between Pierre Cardin and Ahlers persisted for more than a decade. The alleged purpose was to secure an absolute territorial protection for Ahlers within the EEA, particularly in the countries covered by its licensing agreements with Pierre Cardin. Furthermore, the coordination purportedly targeted low-price retailers, such as discounters, in an attempt to hinder their capacity to offer consumers lower prices within the EEA territories.
It’s worth noting that sending a Statement of Objections is a formal procedural step within the Commission’s investigations into potential antitrust violations. This step does not prejudge the ultimate outcome of the investigation but marks the initiation of a thorough examination of the alleged conduct. The implicated parties, in this case, Pierre Cardin and Ahlers, have the opportunity to scrutinize the documents in the Commission’s investigation file, respond in writing, and even request an oral hearing to present their perspectives on the case.
This investigation is rooted in the broader context of the EU’s commitment to fostering fair competition and dismantling practices that stifle market competition. Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement specifically target agreements that prevent, restrict, or distort competition within the EU’s Single Market. As part of its investigative process, the European Commission had conducted unannounced inspections in the clothing manufacturing and distribution sector in June 2021, culminating in the formal proceedings initiated against Pierre Cardin and Ahlers in January 2022.
The gravity of this situation is underlined by the potential consequences. If the European Commission’s preliminary view is validated after the parties exercise their rights of defence, it could result in the imposition of a fine of up to 10% of each company’s annual worldwide turnover. However, it’s imperative to emphasize that this is contingent upon the Commission’s conclusion that sufficient evidence of infringement exists.