France’s antitrust regulator has fined Rolex 91 million euros (approximately $100.7 million), saying the watchmaker restricted competition by forbidding retailers to sell its much-sought-after timepieces online.
In a statement, the regulating agency, Autorité de la Concurrence, called Rolex’s restrictions “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.”
The statement added: “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.”
Such a hefty fine was levied because of the “duration (more than 10 years) and nature” of Rolex’s practices, the Autorité said. Rolex can challenge the decision at the Paris court of appeals within the next two months, says a Concurrence spokesperson. The brand declined comment to JCK.
The French agency rejected Rolex’s argument that a ban on online sales was necessary to preserve its image and enable it to combat counterfeiting and out-of-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 said. “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 program 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 case was spurred by a complaint from former Rolex retailer Pellegrin & Fils, based in Marseille, and was backed by French industry group Union de la Bijouterie Horlogerie. Pellegrin and the union also complained that Rolex forced distributors to “fix” the price of its products.
The Autorité dismissed part of the complaint, saying “elements in the file did not demonstrate that Rolex France SAS had invited its distributors to restrict their pricing freedom, nor that the distributors would, if necessary, have acquiesced to this invitation.”
In the full text of its 134-page decision (translation), the regulator noted that Rolex repeatedly sent mystery shoppers into French retailers that carried its watches to see whether they would be offered discounts.
Yet the report ultimately concluded that while Rolex generally discouraged retailers from price cutting, “most distributors practiced discounts on Rolex brand products” or believed they had the freedom to do so.
Rolex France was also ordered to communicate the Autorité’s decision to its French retailers and to publish a summary on its website and its major newspapers.
(Photo: Getty Images/Jacek Sopotnicki)
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