Nintendo decision: resale price recommended during a press conference

On 1 December 2015, the French Competition Authority issued non-suit decision No. 15-D-18 in the video game sector.

This case arose from a press conference organised in September 2006 in London by Nintendo for the launching of its Wii game console. At this event, the president of Nintendo Co Ltd referred to an "estimated" price for the sale of the console to consumers of €249. This announcement received wide coverage in the French media.

Competition law forbids the imposing of a resale price on distributors. The practice of simply recommending a resale price is legal, in theory, however.

The French Competition Authority, applying the jurisprudence of the Paris Court of Appeal, ruled that an imposed minimum resale price can be proved, in the absence of express contractual clauses, by a body of reliable, precise and consistent evidence that must include the following three factors:

• The stating by the supplier and its distributors of a resale price;
• The implementation of a price policy by the supplier;
• The observation that the prices stated have been effectively applied.

In this decision, the Authority states that simply communicating a recommended resale price at a widely broadcast press conference for the launching of a new product is enough to prove that the first condition has been met. Proof of the individualised sending of letters containing a resale price is therefore not required.

This decision is in line with the jurisprudence of the Paris Court of Appeal, according to which any means whereby a supplier informs its distributors of the price at which it wishes its product to be sold to consumers is enough to prove that the condition of stating the resale price has been met (Paris CA, 26 January 2012, No. 2010/23945, so-called "Perfume" case).

Regarding the second, price policy condition, it has been determined that this condition may be met through simple price monitoring by the supplier (for example by taking price surveys or observing prices at points of sale) without the need to prove that retaliatory measures were taken if price discrepancies were found.

The Nintendo decision states in this respect that the few price observations carried out by Nintendo did not on their own constitute sufficient proof of a price policy or monitoring. This seems to suggest that proving the existence of a price policy depends at least on providing evidence of regular and widespread monitoring of the prices applied by distributors.

This non-suit decision, which illustrates the broad interpretation adopted by the French Competition Authority, therefore once again invites the heads of distribution networks who decide to recommend resale prices to their distributors to take particular care that these recommended prices are not considered to be imposed prices.

Author: Amaury Le Bourdon