Sanrio, creator of Hello Kitty and Friends, has reportedly breached EU competition rules with its non-exclusive licensing agreements.
The European Commission has fined Sanrio €6.2m for banning traders from selling licensed merchandise to other countries within the EEA. The restriction concerned products featuring Hello Kitty and other characters owned by the Japanese brand Sanrio.
In June 2017, the European Commission opened an antitrust investigation into certain licensing and distribution practices by Sanrio, to assess whether it illegally restricted traders from selling licensed merchandise cross-border and online within the EU Single Market. The Commission investigation has found that Sanrio’s non-exclusive licensing agreements breached EU competition rules.
Sanrio imposed a number of direct measures restricting out-of-territory sales by licensees, such as clauses explicitly prohibiting these sales, obligations to refer orders for out-of-territory sales to Sanrio, and limitations to the languages used on the merchandising products. Sanrio also implemented a series of measures as an indirect way to encourage compliance with the out-of-territory restrictions. These measures included carrying out audits and the non-renewal of contracts if licensees did not respect the out-of-territory restrictions.
The Commission has concluded that Sanrio’s illegal practices, which have been in place for 11 years, partitioned the Single Market and prevented licensees in Europe from selling products cross-border, to the ultimate detriment of European consumers.
In response to these conclusions, Sanrio has cooperated with the Commission by providing information that allowed them to establish the extended duration of the infringement. The company also provided evidence and acknowledged the facts and the infringements of EU competition rules. The European Commission has issued Sanrio with a 40% fine reduction in return for its cooperation.