SEB and Electrolux Shares Drop

Shares of SEB (EPA:SEBF) and Electrolux (ST:ELUXb) fell over 3% and 5%, respectively, after the French Competition Authority imposed substantial fines for anti-competitive practices in the household appliance sector.

The regulator revealed a long-standing scheme involving 12 companies, including key manufacturers and distributors, to fix retail prices and inhibit competition.

The total fines reached €611 million, marking one of the largest penalties in recent years.

The French Competition Authority stated that the companies participated in vertical price-fixing agreements between 2007 and 2014, aiming to maintain artificially high retail prices amidst intensifying competition from online distributors.

By dictating prices to distributors and enforcing compliance through retaliatory measures, these manufacturers eliminated competition in their own brands, ultimately denying consumers the benefits of lower prices and broader choices typically associated with increased competition.

Among the implicated companies were SEB, Electrolux, Whirlpool (NYSE:WHR), and LG, alongside sanctioned distributors Boulanger and Darty.

An investigation sparked by the Directorate General for Competition Policy, Consumer Affairs, and Fraud Control revealed critical evidence, including dawn raids in 2013 and 2014. The BSH Group applied for leniency in 2015, aiding authorities with evidence.

In 2016, horizontal agreements among the companies formed a distinct case, culminating in a €189 million fine on six companies in 2018.

The authority emphasized the severity of the violations, pointing out the intentional suppression of competitive pricing during a key growth period for online sales.

By requiring retailers to comply with fixed prices under threat of delivery delays or suspensions, the companies manipulated the market to their advantage, burdening consumers.

Ten of the twelve implicated companies chose not to contest the charges, accepting a settlement procedure that led to reduced fines.