Reply With QuoteGreat news - the ticket and trainer bots can start trading Rolex now
ROLEX FINED €91M IN FRANCE FOR PROHIBITING ONLINE SALES
The Autorité de la concurrence fines Rolex €91,600,000 for prohibiting its authorised retailers from selling its watches online
Published on December 19, 2023
Background
Following referrals from the Union de la Bijouterie Horlogerie and Pellegrin & Fils, as well as dawn raids, the Autorité de la concurrence has fined Rolex France (jointly and severally with Rolex Holding SA, the Hans Wilsdorf Foundation and Rolex SA) for prohibiting its retailers from selling Rolex watches online for more than ten years.
The Autorité considers that the terms of the selective distribution agreement between Rolex France and its retailers constitute a vertical agreement that restricts competition. The Autorité rejected Rolex France’s argument that the ban on online selling was justified by the need to combat counterfeiting and parallel trade. Finding in this respect that Rolex’s main competitors, who face the same risks, authorise the online selling of their products under certain conditions, it considered that these objectives can be achieved by means that are less restrictive of competition.
It has imposed a penalty of €91,600,000 on Rolex France SAS, together with a disclosure and publication injunction.
However, the Autorité rejected the objection concerning the resale prices imposed on its retailers, which had been notified to Rolex. It considered that the evidence in the case did not prove that Rolex France had restricted the pricing freedom of its authorised retailers.
Rolex’s selective distribution model
The Rolex group is a Swiss group founded in 1905 that designs, manufactures and markets luxury watches and components under the Rolex and Tudor brands. In France, imports are handled by a French subsidiary of the Swiss company Rolex Holding SA, Rolex France SAS, the sole importer of the brand’s products.
Rolex is active in the French luxury watch distribution market and, by virtue of its reputation and market share, is, according to several concordant sources, the largest player in the market. The company exclusively uses a network of authorised independent retailers to market its watches. It sells its watches to watch and jewellery retailers, to which it grants the right to distribute its products under a “Rolex selective distribution agreement”.
Rolex prohibits its authorised retailers from selling its products online
The selective distribution agreement governing relations between Rolex and its retailers prohibited the latter from selling the brand’s watches by mail order and, a fortiori, via the Internet. In a letter to one of its retailers, Rolex acknowledged this ban: “we confirm that under no circumstances can our Authorised Retailers, who are the only parties authorised to sell our products, do so via the Internet or by mail order. Any sales via the Internet contravene the provisions of Article IV.3.b of the Selective Distribution Agreement signed by all our Authorised Retailers.”
The Autorité and case law consider this type of clause to be inherently restrictive of competition.
Furthermore, the Autorité’s investigation of Rolex’s retailers confirms the practical application of this ban.
As justification, Rolex argued that the ban on online selling was intended to preserve its image and enable it to combat counterfeiting and off-network sales. While the Autorité does not dispute the legitimacy of these objectives, it found that prohibiting online selling is not a proportionate measure. It points out that Rolex’s main competitors, who themselves face this type of risk, have implemented (primarily technological) solutions to reconcile online selling with the fight against counterfeiting and off-network sales. In addition, Rolex, in conjunction with one of its retailers, has developed a programme for the online purchase of pre-owned watches, whose authenticity it guarantees. An absolute ban on the online selling of its products cannot therefore be justified.
The Autorité fines Rolex €91,600,000
The Autorité considers these practices to be serious, as they amount to closing a marketing channel, to the detriment of consumers and retailers, when the online distribution of luxury products, including watches, has been booming over the past 15 years. Given their duration (more than ten years) and nature, the Autorité is imposing a penalty of €91,600,000. Because of the capital, organisational and legal links between Rolex France and Rolex Holding SA, Rolex SA and the Hans Wilsdorf Foundation, the Autorité holds the latter companies jointly and severally liable for the payment of the fine.
In addition, the Autorité is ordering Rolex France to send a summary of the decision to all its authorised retailers. It must also publish a summary of this decision on its website within two months and for seven consecutive days.
Lastly, the Autorité orders Rolex France to publish a summary of the decision in the print and digital editions of Le Figaro and in Montres Magazine.
Compliance
While a supplier is free to organise its distribution network as it sees fit, this organisation must not give rise to a restriction of competition.
The principle of the free organisation of the network cannot authorise a manufacturer to restrict the commercial freedom of its resellers. Prohibiting its retailers from selling its products online distorts the competition in which resellers should normally engage, not only between themselves but also with regard to the manufacturer in the online sales distribution channel. This rule remains valid even if, as in this case, the products concerned are distributed exclusively or almost exclusively through a network of independent retailers.
Source: MLEX via the French Competition Authority
https://content.mlex.com/Attachments...WD%2f23d13.pdf
Great news - the ticket and trainer bots can start trading Rolex now
I see an appeal coming on
I believe this heralds a sea change in the way people don't buy Rolex watches. Instead of having to go all the way to a dealer's premises where they don't have any watches to sell in order to not be able to buy a watch, customers in France will now be able to visit the dealer's web site and far more conveniently not buy a watch the dealer doesn't have, without ever leaving the comfort of their armchair. A win for the time-challenged consumer.
I read this as though Humphrey Appleby was saying it.Originally Posted by Fullbreakfast
Exactly. What will actually change, other than Rolex has a huge fine to pay?
As you were…
My cover is blown!
Love it =)
Speaking to a French dealer today the ruling means that Rolex will need to allow the sale of their watches online via third parties and that said third parties should not demonstrate any preferential bias towards certain buyers - ie the item is in stock and anyone can buy it and if its out of stock it remains so until some more is available.
If that's the case, that has massive repercussions, if you look at France's fashion industry- as it stands try buying a Hermes Birkin bag or a Chanel boy bag online. There's no option unless it is with a hefty mark up from greys, but then again Hermes and Chanel don't sell their bags new from any other outlet than themselves and can choose their preferred retail model (in store as opposed to offline).
So the only way for Rolex to counter this is to sell exclusively through Rolex boutiques and adopt an offline-only retail strategy.
€91m eh? What's that, about six watches?
Brilliant!!
Isn't that what's happening in the UK?
Superb!
Agreed x 2
I find the case strange, how it impacts on a trade union and a shop that doesn’t sell Rolex I don’t know, I can’t imagine that any AD’s would risk their status by backing the union. This will just speed up the move towards boutiques only. Not sure how they won the against the price fixing charge, last time I bought a Rolex copies of my payment card, id and till receipt needed to be made and sent to Rolex before I was allowed to leave the AD as Rolex were insisting on evidence from the AD that they weren’t discounting.
Loving your work, very good.
plus ça change...
Brilliant and then brilliant again when I read it in "Yes Minister" mode.
Spot on
The price of a Rolex from an AD, assuming you can get one, will increase to recoup the loss resulting from the fine. It's about time that governments etc stopped fining companies and instead fined CEO's and Board Directors personally - they are the ones making the decisions so that's a good way to dissuade them from such sharp practices!
Best Regards - Peter
I'd hate to be with you when you're on your own.
Wish the restriction on parts supply to the watch repair trade could be tackled with the same vigour!
It's an interesting take on it when you consider what happened with Swatch group and ETA in the courts.
The knock on effect on all the AD's who have had to install a Rolex accredited watchmaker and workshop at huge expense......
This is just France…there are many other markets with comparable legal frameworks for this sort of behaviour. A 91m one off fine is pocket change for Rolex, but a UK plus EU-wide investigation might be closer to 5-700m fine which is suddenly very serious. It also sends a clear signal to other luxury brands - so we might see broader shifts.
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You are free to report this issue to the CMA (or whoever your local market competition authority is) who can then take it further
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I think Cousins are leading the fight in admirable fashion.
Got a link to any info on this? I’m all for a bit of class action
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Fining the Crown
https://www.horolonomics.com/2023/12/fining-crown.html
Interesting history lesson!
THIN is the new BLACK
Interesting read, thank you. Most of not is nothing more than I would have assumed but an interesting read never the less. Like the author, I'm intrigued by the French authorities motives for this. Rolex shouldn't be forced into online sales. If people aren't happy with Rolex selling practices then stop buying them. Oh, sorry, I forgot, they can't manage without.
The horological history of Europe (and the UK) is a minefield. I think everybody is after Rolex at the moment. Their slice of the pie is way too big for everyone's comfort.
THIN is the new BLACK
I guess R***x will just increase prices to cover the €91m.
According to another thread, it seems that they already have.
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