EU fines clothing company Guess €40m for partitioning markets

EU antitrust regulators fined US clothing company Guess €40 million on Monday for illegally blocking cross-border sales in Europe, part of a crackdown against illegal practices blocking ecommerce in the EU.

The investigation into Guess began in June 2017 following a year-long inquiry into the cross-border online sales practices of 1,900 companies.

The European Commission said Guess’s distribution deals with retailers restricted them from using the Guess brand names and trademarks for online search advertising and also prevented them from setting the retail price independently.

Retailers were also required to get authorisation from Guess before they were allowed to sell online, while the criteria for such approval was not based on any specified quality criteria. Sellers were also not allowed to sell to consumers outside their authorised areas.

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This system allowed Guess to partition off certain European markets, resulting in retail prices 5-10 per cent higher in central and eastern Europe than in western Europe, the commission said.

The illegal practices occurred up to October 31st last year. The EU competition enforcer said the retailer co-operated by providing key evidence and received a 50 per cent cut in the fine. Guess had estimated the EU fine at €37 million to €40.6 million in a regulatory filing last month, saying it had already made certain changes to business practices and agreements in response to the EU investigation. – Reuters