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Articles 10th Nov 2016

Black Friday: CMA campaign targets online sellers and software providers

It’s that time of year again…the run up to Christmas involves parties, (sometimes) snow, and undoubtedly the frenzy of last minute Christmas shopping, with many people now choosing to shop from the comfort of their own homes through online sellers and marketplaces.

In light of this, the Competition and Markets Authority (“CMA”) has announced a new campaign to ensure that online retailers and IT software providers are complying with competition law and are not engaging in price fixing. This follows evidence found by the CMA that there has been collusion between sellers using online marketplaces (such as Amazon, eBay or other online retail platforms) and automated re-pricing software to discuss and agree price levels.

A recent decision by the CMA imposed a fine of more than £160,000 on Trod Ltd, an online seller of Justin Bieber, One Direction and other (apparently) popular artistic posters and frames, for agreeing with a competitor (GB eye, t/a GB Posters) not to undercut each other’s prices when selling through Amazon UK, except where another seller on Amazon UK was cheaper than both.

GB received immunity from fines under the CMA’s leniency policy, having reported the price fixing agreement with Trod to the CMA. In this case, the price fixing occurred via automated re-pricing software on Amazon. Neither Amazon nor the software providers were investigated by the CMA.

The campaign’s key messages are that online sellers should not agree with their competitors what prices they will charge, or that they will not undercut each other on price. They should also not discuss their pricing intentions or strategies with competitors.

In an attempt to reduce the risk of breaches by online sellers, the CMA is writing to various online companies which may be denying customers the best available deals and reminding them of their obligations under competition law. The CMA is also using online marketplace providers to help impart the CMA’s advice to online sellers.

Software providers too are being warned not to facilitate breaches of competition law by helping their clients use IT software to monitor and adjust prices or give effect to other anti-competitive agreements.

The CMA has released a quick guide on how to avoid price fixing, including a list of ‘dos’ and ‘don’ts’:

  • Do not agree with competitors that you will not undercut each other
  • Do not agree with competitors what prices you will each sell your products for
  • Do not discuss your pricing strategies or intentions with competitors
  • Do familiarise yourself and your staff with competition law
  • Do seek independent legal advice to ensure you comply with competition law

Stephen Blake, Senior Director of the CMA’s Cartels and Criminal Group said:

“As we enter the peak shopping months of November and December, sellers should make sure they have read our advice so they don’t get caught out. The consequences for those who don’t can be serious.”

With potential criminal liability (imprisonment for up to 5 years and unlimited personal fines) and director disqualification (for up to 15 years) for the individuals involved, as well as fines of up to 10% of worldwide group turnover and damages actions against the companies concerned, the consequences of colluding on prices can be grave indeed.

The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
Andrew Maxwell

Author: Andrew Maxwell

Partner & Head of Competition

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