Royal Canin Polska, pet food maker, has concluded an illegal agreement with its distributors. Penalties imposed by the President of UOKiK upon the maker and its 5 distributors exceeded PLN 3 million (ca. 750,000 EUR). In addition, the Office is verifying whether a bid rigging scheme has been entered into by entrepreneurs offering rabies vaccines for wild foxes

In June 2011 the President of UOKiK initiated proceedings against Royal Canin Polska, the maker of cat and dog food, and five of its distributors – Kolme of Warsaw, Hurtownia Leków Weterynaryjnych Bayleg of Kunice, Royal Kennel of Wrocław, Royal-Serwis-Poznań of Suchy Las and PHU Parys of Gliwice.

As identified in the course of the proceedings, the company decided, along with its business partners, in July 2010, that it would limit the number of distribution channels for its “Veterinary Diet” cat and dog food, i.e. products that are considered dietetic feeds. The above coincided with complaints filed to the manufacturer by veterinary doctors and concerned with excessively low prices of those products offered over the Internet. In line with the recommendations of Royal Canin dated July 2010, the distributors started distributing those products only among those veterinary clinics that offered no Internet sales. At a later date the restriction was modified, and products could be sold only to those resellers who guaranteed that the nourishment of animals with the use of the feed in question would be supervised by a vet. Restrictions of this type were not required under the applicable veterinary regulations, in line with which dietetic feeds are not considered medicinal products. To the contrary - under the same regulations, products of this type may be sold via remote communications means, e.g. over the Internet or over the phone.

According to the President of UOKiK, by introducing the new principles governing the delivery of “Veterinary Diet” products, the distributors intended to practically eliminate all channels of sale of those products other than veterinary practices. The aforementioned restriction applied to Internet sales as well. The Office has analyzed the information obtained from several dozen sellers and concerned with the potential problems they experienced while willing to purchase food from this particular product line - the evidence collected has substantiated the materials gathered in the course of the proceedings.

Reduction in the number of distribution channels of “Veterinary Diet” products has not only resulted in restricted competition, but has exerted a considerable impact on the final price paid by the consumers. The President of UOKiK discovered that veterinary clinics were selling food products from this particular line with a 30-40 per cent profit margin, while online stores were offering the same products with a 10-15 per cent profit margin. Due to an illegal agreement reached by the six distributors, the cost of diet therapy for their pets borne by the consumers were considerably higher, as apart from having to pay more for the feed itself, the clients had to pay additional fees for visiting the vet. The scale of the problem faced by the consumers as a result of the restriction introduced is best confirmed by a petition to Royal Canin they have published on the Internet in September 2010. The document was signed by 450 consumers expressing their concern with the lack of the food’s availability in their preferred e-sales channel.

Financial penalties

The President of UOKiK has imposed, upon the fixing scheme participants, penalties exceeding the total of PLN 3,209,363* (ca. 800,000 EUR) including a fine of PLN 2,086,829 (ca. 520,000 EUR) for Royal Canin Polska - the initiator of the illegal agreement. Royal-Serwis-Poznań and PHU Parys have discontinued the illegal practices. The decision is not legally binding, and all scheme participants have appealed against it to court.

Veterinary product market under UOKiK’s surveillance

The Office is currently in the process of scrutinizing another branch of the veterinary products market. In December 2013, the President of UOKiK initiated proceedings concerning a competition-limiting arrangement concluded on the market of rabies vaccines for wild foxes. The proceedings aim to determine whether three entrepreneurs (PPHU Inex of Giżycko, Pro-Wet Śpioch-Wiese of Koszalin and IDT Biologia GmbH of Dessau-Roβlau, Germany) participated in a bid rigging scheme, as a result of which the values of bids submitted in tenders organized by Voivodeship Veterinary Officers, over a period of approximately 5 years, were prearranged. The proceedings were initiated by the President of UOKiK based on a notice filed by Poland’s Chief Veterinary Officer.

The maximum fine imposed by the President of UOKiK for the participation in an illegal scheme may equal 10 per cent of the entrepreneur’s revenues generated in the year preceding the date on which the decision is issued.  Participants of such schemes who are willing to avoid any financial sanctions may take advantage of the leniency program. The entity that supplies valuable information proving the existence of such a scheme, providing that it is not the initiator thereof and has not encouraged others to participate in the unlawful activities, may have their financial penalties waved in part or in full.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Phone: +48 22 827 28 92, 55 60 314
Fax +48 22 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]