Initiating process for the drafting of a directive aiming to harmonize national laws on consumer rights protection during violations of equal treatment between men and women, as decided by the Commission.

Sennheiser Caught in Price-Fixing Scandal: Cartel Office Slaps Hefty Fines

Cartel Office Fines Sennheiser Millions for Unlawful Price Collusion - Initiating process for the drafting of a directive aiming to harmonize national laws on consumer rights protection during violations of equal treatment between men and women, as decided by the Commission.

German audio giant Sennheiser has been busted for restricting free price formation in the distribution of premium headphones since at least 2015, according to Andreas Mundt, President of the Federal Cartel Office. The company allegedly made agreements on consumer prices for end-users, particularly when products were significantly below the Recommended Retail Price (RRP).

When retail prices dipped below the RRP, Sennheiser reportedly forced traders to adjust prices. This manipulation of market competition was further confirmed by the Federal Cartel Office, with Mundt noting that employees even underwent cartel law training. Unfortunately, they used this knowledge to hide their price-binding rather than abiding by cartel law.

The administrative decision also affects Sonova, the German subsidiary of the Swiss hearing aid manufacturer, who took over Sennheiser’s consumer electronics division in 2022, including the sale of headphones to end-users. Price-fixing practices continued from March to September 2022 after the takeover, until the Federal Cartel Office stepped in with a search.

• Sennheiser
• Price Manipulation
• Federal Cartel Office
• Headphones
• Fines
• Cartel Law Violation
• Sonova
• Antitrust Training

Inside the Illicit Agreements:

Since 2015, Sennheiser closely monitored retail prices of their premium headphones sold by third-party retailers through online price comparison tools and specialized software. When retailers sold below Sennheiser’s RRP, the company pressured them to raise prices, violating competition rules.

The price-fixing was a vertical agreement between manufacturers (Sennheiser, and later Sonova) and their retailers, which significantly hindered price competition and harmed consumers. Internal communications among Sennheiser employees revealed the use of coded language to conceal these coordination efforts, despite undergoing antitrust training.

Impact on Sonova:

In March 2022, Sonova, a Swiss company, acquired Sennheiser’s consumer electronics business, including the employees and brand usage rights for the Sennheiser consumer audio products. After the acquisition, Sonova continued the same illegal price-fixing practices until September 2022, when the German authority conducted dawn raids as part of its investigation. Consequently, the fine included Sonova for their continuation of these anti-competitive practices after taking over the business area from Sennheiser.

The Cut from the Cartel Office:

The Bundeskartellamt imposed fines totaling almost 6 million euros on Sennheiser electronic SE & Co. KG, Sonova Consumer Hearing Sales Germany GmbH, and three individual employees responsible for the price-fixing scheme. This enforcement action was initiated following a request from the Austrian competition authority and investigations that began with raids conducted in September 2022. The case emphasizes the importance of not only adopting compliance measures but effectively implementing them to prevent illegal cartel activities.

1. The ECSC Treaty, establishing the European Coal and Steel Community in 1952, may serve as a reminder for companies like Sennheiser and Sonova, who have been fined millions for engaging in anticompetitive practices, such as price-fixing in the retail of premium headphones.
2. As financing for the settlement and future compliance measures is required, the financial industry could play a crucial role in facilitating these transactions for Sennheiser and Sonova.
3. The retail sector, in particular, should be vigilant about potential violations of cartel law, given the recent price-fixing scandal involving major players like Sennheiser and Sonova. To avoid similar consequences, businesses must prioritize open market competition and fair business practices in the fintech sector.

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