The German Federal Cartel Office (the Bundeskartellamt) has imposed fines totalling almost 6 million euros on Sennheiser and Sonova Consumer Hearing Sales Germany. The fines are for vertical price fixing taking place from 2015 to 2022, and they apply not only to the two companies, but to three employees.

The cartel regulation agency will be releasing more details shortly when it publishes the case summary on its website. Sonova has said it will not comment on individual employees.

 

A dawn raid as proceedings began

 

The orders imposing the fines are final and the FCO decided not to impose fines on the retailers involved. In its announcement, the FCO outlines that high quality consumer electronics products, particularly headphones, are sold under the brand name Sennheiser, a business area which Sonova took over in March 2022, including control of employees and brand usage rights, and at this point “Sennheiser completely withdrew from the business area of consumer electronics,” claims the cartel investigators.

Price fixing was applied, says the FCO, until September 2022, and investigations were initiated with a dawn raid of premises in September 2022 following a request for official assistance by the Austrian competition authority (BWB). However, the agency points out that from the moment Sonova took over the business from Sennheiser, “the measures were continued to a lesser extent until the Bundeskartellamt’s dawn raid in September 2022″.

 

Sonova “regrets misconduct” and trains staff to follow code of conduct

 

A Sonova spokesperson has clarified that the practices investigated by the German Federal Cartel Office are alleged to have been ongoing from 2015 to 2022, while underlining that “the settlement relates to allegations which concerned certain retail practices from employees in the Consumer Electronics business that Sonova acquired from Sennheiser electronic SE & Co. KG in March 2022.”

“We regret this misconduct. Sonova is committed to upholding the highest standards of ethics and compliance in all aspects of our business. We do not tolerate any behavior that violates our values, laws, or regulations and we are continuously and systematically training our employees in commercial practices reflected in our Code of Conduct,” said Sonova.

 

End consumer prices of products increased

 

The official details from the Federal Cartel Office read: “Since at least 2015, in addition to conducting the usual negotiations on purchasing prices, Sennheiser employees also agreed on concerted measures for setting end consumer sales prices for “premium headphones” with their authorised dealers in Germany. These measures generally pertained to an increase in end consumer prices.”

“The retailers’ end consumer prices were continuously monitored using online price comparison services and in some cases also special software. The measures were implemented, to a varying extent, especially when end consumer prices were considerably below the recommended resale price (RRP) or after retailers had complained about inadequate end consumer prices. Whenever Sennheiser intervened in this way, the retailers approached usually agreed to raise the end consumer prices in question or adjusted their prices upwards,” the description continues.

 

Employees fixed prices using “code language”

 

The FCO statement details that “internally, employees used a “code language” for the concerted measures, referring to compliance with selective distribution criteria”.

“In setting the fine the Bundeskartellamt took into account that Sennheiser and Sonova had cooperated extensively with the Bundeskartellamt and that a settlement could be reached. The orders imposing the fines are final. The Bundeskartellamt decided not to impose fines on the retailers involved,” the FCO declared.”

Andreas Mundt, President of the FCO, stressed the importance of the transgression: “Over a long period of time, Sennheiser hampered the free pricing of premium headphones. It constantly monitored end consumer prices and intervened when necessary to have the retailers involved raise their prices. The Sennheiser employees even underwent antitrust training but used that knowledge to cover up their price-fixing practices. This illustrates that companies must not only adopt compliance measures but also put them into practice.”

“When it comes to illegal cartels, what first comes to mind are agreements at the same market level, for example between manufacturers or between retailers. However, price competition is also significantly hindered to the detriment of consumers if manufacturers and their retailers conclude agreements on fixed retail prices,” affirmed Mundt.

 

Fine of €6m does not impact Sonova’s 2025 forecast

 

A Sonova spokesperson has stressed that the group’s financial projections are not hit by this financial penalty. “The fine does not impact Sonova’s financial forecasts for its full fiscal year 2025/26. In fact, the penalty and legal costs were already reflected in our full fiscal year 2024/25 results, as announced on May 9.”

 

In 2009 the Sonova brand Phonak also ran afoul of the Cartel Office

 

In 2009 the German Federal Cartel Office imposed a fine of €4.2 million on Phonak GmbH, which was accused of having influenced the resale prices of its products in an “anticompetitive manner”. In that case, declared the FCO at the time, “a hearing aid retailer had published prices for hearing aids from all manufacturers in the Internet. The prices for Phonak hearing aids were in some cases clearly below the minimum price level applied in the market until then. As a result other hearing aid retailers from across Germany complained to Phonak GmbH about the price-breaker. Phonak GmbH reacted by refusing to sell to the respective hearing aid retailer in order to – successfully – induce him to raise his resale prices”.

Phonak did not appeal the decision but denied the conduct in question. In an announcement in October 2009, Phonak indicated that an agreement had been reached with the FCO but “denied that it has systematically influenced the retail prices of hearing aid audiologists”.

Source: Bundeskartellamt / Sonova