Hello Kitty creator Sanrio fined US$6.94m by the EU for restricting cross-border sales

Japanese company Sanrio has been fined approximately US$6.94 million by the European Commission (EU) for restricting cross-border sales of merchandising products featuring Hello Kitty characters. According to the EU, Sanrio banned traders from selling licensed merchandise covering all 12 characters owned by Sanrio to countries within the European Single Market.

In a court filing seen by Marketing, the commission said 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. In addition, the EU found that Sanrio also implemented a series of measures as an indirect way to encourage compliance with the out-of-territory restrictions, such as carrying out audits and the non-renewal of contracts if licensees did not respect the out-of-territory restrictions.

This comes after the commission opened an antitrust investigation in June 2017 into certain licensing and distribution practices of Sanrio to assess whether it illegally restricted traders from selling licensed merchandise cross-border and online within the European Single Market.

According to the commission, Sanrio’s illegal practices were in force for approximately 11 years, from 1 January 2008 until 21 December 2018. Throughout the investigation, the EU said Sanrio cooperated by providing the commission with information that allowed it to establish the extended duration of the infringement. The company also provided evidence with significant added value and expressly acknowledged the facts and the infringements of EU competition rules. Marketing has reached out to Sanrio for comment.

Commissioner Margrethe Vestager who is in charge of competition policy, said the decision on Sanrio’s fine confirms that traders who sell licensed products cannot be prevented from selling products in a different country.

“This leads to less choice and potentially higher prices for consumers and is against EU antitrust rules. Consumers, whether they are buying a Hello Kitty mug or a Chococat toy, can now take full advantage of one of the main benefits of the Single Market: the ability to shop around Europe for the best deals,” she added.

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