The luxury segment is struggling on stock exchanges. News from May 18th of surprise inspections by the European Commission in some companies (names not listed) is weighing on the valuations. These companies allegedly formed a cartel, as well as having implemented restrictive commercial practices to limit competition. The procedure will likely be very long and complex, and groups found guilty risk receiving fines up to 10% of their global revenue.
Surprise inspections
The names of the groups involved in the matter aren’t known. But in general, the shares of luxury companies have found difficulties at opening. The supposed thesis of the EU Commission is that fashion groups have formed a cartel. “The European Commission fears that companies involved may have violated article 101 of the EU Treaty – recites the note by the Antitrust authority -. Moreover: article 53 of the Agreement managing the EU’s marketplace as well. Representatives of the Commission were accompanied by their colleagues, of the various individual nations, to guarantee fairness”. The EU Commission didn’t even cite the countries involved, but it did send formal requests for information to companies.
The process
“Unannounced inspections are a preliminary investigative step into suspected anticompetitive practices”, points out the Commission. There is no proof of guilt as of now. There are also no information regarding the duration of the inspections and whether there will be additional ones, and it’s unknown what the deadline is for the procedure.
Sanctions
As specified by Milano Finanza, the companies found guilty of violating the antitrust laws of the EU risk fines up to 10% their global revenue. Based on the EU clemency program, companies part of a cartel can obtain a reduction or cancelling of the fines if they fully collaborate with Brussels during the investigation.
Read also:
