The companies
Sennheiser is a leading manufacturer of high-end electronic products, specifically headphones and microphones for a range of uses. Sennheiser divested itself of its Consumer Electronics business unit in a carve-out, selling it to Sonova. A carve-out is the partial divestiture of a business unit. In this case, Sennheiser transferred its Consumer Electronics unit to Sonova.
Sonova is an international provider of hearing care solutions, focusing in particular on consumer hearing, hearing aids, audiological care and cochlear implants.
Background
In 2022, the AFCA initiated investigations in response to alleged vertical agreements in relation to the sale of Sennheiser headphones. Later in the year, in September 2022, the AFCA conducted dawn raids at Sennheiser and Sonova in Germany, with the help of the German Bundeskartellamt.
Infringement
Sennheiser and Sonova had displayed anti-competitive behaviour by undertaking vertical retail price fixing in relation to consumer electronics products (entertainment and household electronics) of the Sennheiser brand. Vertical agreements are agreements between companies operating at different levels of the supply chain.
This constituted a single and continuous infringement. The competition infringements were committed by Sennheiser from May 2015 to February 2022 and by Sonova from March 2022 to September 2022.
Specifically, Sennheiser and Sonova had taken systematic action to monitor resale prices and to maintain prices. The aim was to adjust recommended retail prices upwards. This was achieved by influencing their (authorised) resellers and their retail partners.
Agreements on resale prices are considered to be wilful restrictions of competition. These “hardcore restrictions” are classed as one of the severest breaches of the ban on cartels. In general, competition restrictions that directly impact on price competition are viewed particularly critically.
Application for leniency – cooperation
In 2023, Sennheiser and Sonova applied to the AFCA for leniency, with their application later being completed. Sennheiser and Sonova cooperated fully with the AFCA. Their cooperation was considered accordingly when setting the amount of the fine, with the involvement of the Federal Cartel Prosecutor.