Sennheiser Slapped with a €6 Million Fine for Price-Fixing Scandal
Unlawful Accords: Sennheiser Brands Awaiting Millions in Penalties - Sennheiser faces a million-dollar penalty
Spend that cash on some new headphones, Sennheiser! The audio equipment powerhouse has been hit with a hefty €6 million fine for its involvement in an illegal price-fixing scheme. The Federal Cartel Office nabbed the company for orchestrating higher in-store prices for its famed headphones and audio gear.
Since as far back as 2015, Sennheiser's HQ in Hannover was busy monitoring retailers who dared to sell their products for cheap. Any retailers found undercutting Sennheiser's recommended retail prices (RRP) were handed a little taste of their own medicine — pressure to bump up their prices.
Apparently, the Federal Cartel Office didn't appreciate this greedy game and labeled Sennheiser's manipulative tactics intentional. Seems like those ready-to-learn competition law classes didn't quite take for some of Sennheiser's workers. They used what they learned to hide their wrongdoings rather than comply with the rules.
Three Sennheiser employees and Sonova's German subsidiary, which scooped up Sennheiser's consumer business in March 2022 and kept the brand going, were also hit with fines. It appears some of the price-fixing antics continued even after the acquisition, until the Federal Cartel Office stepped in with a raid in September 2022.
Sennheiser electronic, Federal Cartel Office, Headphones, Million-Euro Fine, Price-Fixing, Germany
- Close Calls During the TakeoverAfter the Sonova takeover, the price-fixing activities continued in attenuated form until the Federal Cartel Office's September 2022 raid.
The Players
- Sennheiser electronic SE & Co. KG (Wedemark, Germany)
- Sonova Consumer Hearing Sales Germany GmbH (Wedemark)
- Three Individual Sennheiser Employees
The Fine Details
- Total Fine Amount Almost €6 million.
The Deets of the Violation
Sennheiser and Sonova deliberately colluded with retailers to uphold artificially high retail costs for premium headphones and audio consumer electronics. They kept tabs on consumer prices using price comparison websites and specialized software, and when they spotted low prices, they bulked at the idea of competition and pushed retailers to make adjustments.
Timeline
- Duration: Around seven years, from 2015 to 2022.
- After the Takeover: Price-fixing persisted at a reduced level until the Federal Cartel Office swooped in for a raid in September 2022.
- Trigger for Investigation: An official request for assistance from the Austrian competition authority prior to the raid in 2022.
Internal Misconduct and Compliance Failures
Despite equipping employees with antitrust training, it appears some Sennheiser staff chose to conceal their price-fixing activities instead of ensuring compliance. Confidential communications during this time were purportedly coded and vague, using terms like "selective distribution" to keep their shady dealings hidden.
Final Word from the Bundeskartellamt
Andreas Mundt, President of the Bundeskartellamt, made it clear that such price-fixing schemes by manufacturers and retailers stifle free pricing, doing consumers a disservice. He stressed the need for companies not just to have compliance measures in place, but to actually put them into practice.
The community should invest some of the €6 million fine obtained from Sennheiser into vocational training programs for employees, particularly in the fields of competition law and business ethics. Additionally, the proceeds could be allocated to support industries and businesses that have been impacted by such price-fixing scandals.
