AdC sanctions supplier of food supplements
Press Release 31/2022
December 19, 2022
The AdC has sanctioned Farmodiética - Cosmética, Dietética e Produtos Farmacêuticos, S.A., for fixing and imposing retail prices to distributors. The case concluded earlier due to the collaboration of the company, which admitted its liability and agreed to settle the case, putting an end to the infringement.
Farmodiética is an important supplier of food supplements and healthy food products, present in several distribution channels throughout the country.
The AdC has sanctioned Farmodiética with a fine of €1.25 millions, reduced due to the cooperation of the company under the settlement procedure.
Farmodiética imposed to its distributors the retail price at which its products should be sold to final consumers.
This conduct was carried out by Farmodiética from October 5, 2015 to January 21, 2022.
During this period, the company imposed on its distributors the resale prices by sending them retail price tables and setting the maximum applicable discounts on the retail price of its products.
To this end, Farmodiética implemented a system for controlling and monitoring compliance with the resale prices it set (or the limit of discounts authorized). Simultaneously, created a system of incentives, threatening or reducing the commercial conditions of its distributors, as well as cutting off the supply or limiting the restocking in case of non-compliance.
The practice in question, of fixing retail prices, represents a high degree of harm to competition and is known as “Resale Price Maintenenance” (RPM):
The AdC sanctioned Farmodiética with a fine of €1,258,900.
The fines imposed by the AdC are determined by the turnover of the companies in the affected markets in the years of the practice. According to the Competition Law, fines cannot exceed 10% of turnover in the year prior to the date of adoption of the decision. When setting the fine, the AdC takes into account the gravity and duration of the infringement, the degree of participation of the companies in the infringement, the economic situation of the undertakings, among other circumstances (see the AdC’s Guidelines on the methodology in the application of fines).
The fine imposed on Farmodiética was reduced in 30% as the company agreed to settle the case, as it acknowledged its liability in the practice in question, put an end to it, collaborated with the AdC and waived litigating in court on the facts.
The use of the settlement procedure is an effective tool to simplify and speed up proceedings, while sanctioning the companies that commit competition infringements. In the settlement procedure, companies acknowledge their responsibility in the infringements and, therefore, benefit from a reduction in the total fine imposed.
Anti-competitive behavior not only reduces the welfare of consumers, but also harms the competitiveness of firms and the economy as a whole.
More information about the case can be found on the AdC’s website.