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RESTRICTED COMPETITION BETWEEN DISTRIBUTORS HAS PREVENTED CONSUMERS FROM GETTING CHEAPER HEAT PUMPS

12 12 2024

The Competition Council found that Iglu Tech, a manufacturer of heat pumps, had restricted competition among its distributors by fixing the resale prices of its products to be charged to the end-users by the companies that distributed heat pumps throughout Lithuania. As a result, Iglu Tech and its holding company, Unit Invest, were jointly and severally fined EUR 909,280 for committing one of the most serious infringements of competition law, which resulted in higher prices for consumers.

The investigation revealed that starting in June 2021, Iglu Tech entered into agreements with some of its distributors, stipulating not only the resale price levels of its heat pumps but also the maximum discount rates allowed. Iglu Tech monitored the prices and discounts applied by distributors on online shops, sent warnings and requests to change the prices, and threatened to terminate contracts if the products were sold at lower prices than those specified by the manufacturer.

Although Iglu Tech referred to its prices as recommended in contracts and communications with distributors, the Competition Council's expert analysis of the facts has shown that all distributors were in fact obliged to comply with these recommended prices and the maximum discount rates allowed.

Iglu Tech applied the same distribution conditions to some other companies selling the products, with whom it had not signed official distribution agreements.

In consideration of all circumstances, the Competition Council decided to impose a joint and several fine of EUR 909,280 on Iglu Tech and Unit Invest for the prohibited agreements that restricted competition. In the absence of sufficient evidence, that Axioma servisas and Axioma LT were involved in the prohibited agreement, the procedure against these companies was terminated.

The decision of the Competition Council can be appealed to the Regional Administrative Court within one month from the day it is delivered or published on the institution's website.

Jolanta Ivanauskienė, the Chairwoman of the Competition Council, emphasised that agreements preventing companies from selling products below prices set by producers or suppliers, or from offering discounts, are particularly harmful to consumers.

“When distributors compete with each other and set their own prices, they can offer customers more attractive prices and discounts. In this case, the heat pump manufacturer restricted competition across its distribution network by imposing fixed price levels and discount limits, which ultimately disadvantaged consumers,” said Ms. Ivanauskienė.

In the past two years, the Authority has concluded three investigations into price fixing and the non-application of discounts to consumers. In order to conduct the most recent investigation efficiently and make rational use of available resources, in this case, the investigation was carried out against the actions of the manufacturer and the related companies.

Last updated: 12 12 2024