Sennheiser Slapped with €6 Million Fine for Unethical Price-Fixing
Unlawful Accords: Sennheiser Faces Hefty Multi-Million Penalty - Sennheiser faces a hefty one-million-dollar penalty
Audio giant Sennheiser has been served a hefty €6 million fine by Germany's Federal Cartel Office (Bundeskartellamt) for their underhanded price-fixing tactics. The popular headphone manufacturer has been found guilty of manipulating retail prices in cahoots with their retail partners, as announced by the authorities.
Since 2015, Sennheiser electronic SE & Co. KG, based in Wedemark near Hannover, had been on the lookout for retailers offering suspiciously low prices for their premium headphones. Those undercutting the Manufacturer’s Suggested Retail Price (MSRP) received a stern message—raise your prices or face consequences.
The Federal Cartel Office has called this activity intentional. The employees, who had received competition law training, were found using their knowledge to disguise these unlawful practices.
The fine also extends to three responsible employees and the German subsidiary of Swiss hearing aid manufacturer Sonova. The illegal agreements continued in a reduced capacity even after Sonova took over Sennheiser’s consumer business in March 2022 and continued operations under the same brand. The undercover dealings came to light during a raid by the Federal Cartel Office in September 2022.
- Sennheiser
- Federal Cartel Office
- Price-Fixing
- Million fine
- Headphones
- Germany
- Bonn
- Illegal activities
- Agreement
- Hannover
Unraveling the Price-Fixing Scheme
- Sennheiser intentionally monitored and attempted to control retail prices for their high-end headphones sold by authorized dealers in Germany.
- The company employed online price comparison websites and specialized software to keep tabs on retailers’ pricing.
- When retailers offered prices below the MSRP, Sennheiser exerted pressure and intervened to push prices upward, to maintain consistent high prices across the market.
- Internal communications utilized coded language to mask the deceptive practices.
- Employees involved had received corporate antitrust training but turned that knowledge against the rules, using it to veil the unethical price-fixing activities.
The Fallout and Legacy
- In March 2022, Swiss hearing aid company Sonova bought over Sennheiser's consumer electronics division, including brand rights and employees.
- Despite the transfer of ownership, Sonova continued the price-fixing methods in a scaled-down fashion until the Bundeskartellamt's raid in September 2022.
- The investigation had been prompted by a request for assistance from the Austrian competition authority and a subsequent raid by German regulators.
- As a consequence, Sennheiser entirely withdrew from the consumer electronics business sector.
- The fines and the ensuing public scrutiny serve as a reminder to companies about the importance of not only implementing compliance programs but actively enforcing them in practice.
- The illegal price-fixing scheme extended to Sennheiser's German subsidiary, even after the takeover by Swiss hearing aid manufacturer Sonova, demonstrating the need for vigilant adherence to industry competition laws.
- The fine issued by the Federal Cartel Office not only targets Sennheiser but also three responsible employees and Sonova's German subsidiary, emphasizing the importance of ethical business practices, including fair finance and technology in vocational training and the broader industry.
