December 17, 2018 / 11:35 AM / 7 months ago

Fashion group Guess fined $45 million for blocking EU cross-border sales

FILE PHOTO: Employees wait for customers in the Guess section in the Central Universal Department Store in Kiev, Ukraine May 17, 2017. REUTERS/Valentyn Ogirenko/File Photo

BRUSSELS (Reuters) - European Union antitrust regulators fined U.S clothing company Guess (GES.N) 40 million euros ($45.3 million) on Monday for illegally blocking cross-border sales in Europe, part of a crackdown against illegal practices blocking e-commerce in the EU.

The investigation into Guess began in June 2017 following a year-long inquiry into the cross-border online sales practices of 1,900 companies.

The European Commission said Guess’ distribution deals with retailers restricted them from using the Guess brand names and trademarks for online search advertising and also prevented them from setting the retail price independently.

Retailers were also required to get authorization from Guess before they were allowed to sell online, while the criteria for such approval was not based on any specified quality criteria. Sellers were also not allowed to sell to consumers outside their authorized areas.

This system allowed Guess to partition off certain European markets, resulting in retail prices 5 to 10 percent higher in central and eastern Europe than in western Europe, the Commission said. The illegal practices occurred up to Oct. 31 last year.

The EU competition enforcer said the retailer cooperated by providing key evidence and received a 50 percent cut in the fine.

Guess had already estimated the EU fine at 37 to 40.6 million euros in a regulatory filing last month, saying that it had already made certain changes to business practices and agreements in response to the EU investigation.

Reporting by Foo Yun Chee. Editing by Jane Merriman

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