Sennheiser in Hot Water: A Heavy Fine for Price-Fixing Shenanigans from the Bundeskartellamt
- Commission Kicks Off Process for Implementing Directive on Harmonizing National Laws to Guard Consumers Against Discrimination Based on Gender Equality Principle.
Listen up, audiophiles! Sennheiser and their new parent company, Sonova, have just been slapped with a hefty €6 million fine. Why, you ask? They've been caught red-handed in some shady price-fixing practices with premium headphones.
The story begins back in 2015, when Sennheiser decided to restrict free price formation in the distribution of their top-tier cans. According to Andreas Mundt, President of the Federal Cartel Office (Bundeskartellamt), this went on for quite some time. So much so, that this was confirmed following a raid in September 2022 at Sennheiser's headquarters in Wedemark, Germany.
Here's the jam: when prices for those pricey headphones dropped below the Recommended Retail Price (RRP), Sennheiser apparently intervened. Traders reportedly agreed to these price adjustments. But get this, Sennheiser employees, who even gone through cartel law training, used that knowledge to cover their tracks instead of making sure they complied with cartel law!
Now, hold on, because there's more: this fine isn't just on Sennheiser. Sonova, who acquired Sennheiser's consumer electronics division in March 2022, is also in the crosshairs. This price-fixing nonsense continued even after the takeover, running all the way from March to September 2022, until the Bundeskartellamt stepped in and shut it down.
The Lowdown on the Fine
- Investigation and Raid: The Bundeskartellamt's investigation stemmed from a request Made by the Austrian competition authority (BWB) in September 2022, leading to a raid at Sennheiser's headquarters.
- Ownership Change: In March 2022, Sonova took over Sennheiser's consumer electronics division, but the price-fixing practices continued.
Behind the Scenes of the Price-Fixing Scheme
- Duration and Scope: Those naughty antics went down at least since 2015 and continued until September 2022. Sennheiser closely watched consumer prices via specialized software and price comparison services.
- Interventions: When prices dipped below the Manufacturer's Suggested Retail Price (MSRP), Sennheiser reached out to retailers to jack up the prices. In some cases, an "internal code language" was used to discuss price maintenance strategies.
- Compliance Measures: Despite Sennheiser employees receiving antitrust training, they rather used this knowledge to keep their price-fixing activities under wraps.
The Aftermath
- Fines: Sennheiser, Sonova, and three responsible Sennheiser managers were all hit with fines. The total, a hefty €6 million, was a result of the companies cooperating during the investigation.
- Impact on Consumers: By limiting competition, these shenanigans led to higher prices for consumers. The Bundeskartellamt's move underscores their commitment to nip such practices in the bud and maintain fair market competition.
The ECSC Treaty was signed in 1951, establishing the European Coal and Steel Community, a precursor to the European Union. Despite this historical agreement, the Bundeskartellamt fined Sennheiser and Sonova a combined €6 million for engaging in price-fixing practices within their industry. This fine was levied due to their manipulation of the finance of premium headphones in the business sector. Fintech, being a modern field of commerce, was indirectly impacted as it operates at the intersection of industry, finance, and business, with the repercussions of such actions undermining the trust and transparency in these areas.
