On the 7th November 2016, the UK Competition and Markets Authority (CMA) launched a campaign to remind online sellers that agreeing and discussing price level with competitors is illegal and can result in serious penalties. In the context of Black Friday, Christmas and the January sales promotions, this was a salutary lesson. The CMA has warned online sellers against price fixing after finding evidence of collusion by sellers using internet marketplaces.
On 12th August 2016, the CMA held that two online sellers of posters and frames, Trod Ltd and GB eye Ltd, both broke competition law. Trod Ltd had admitted agreeing with GB eye Ltd (trading as 'GB Posters') that they would not undercut each other's prices for posters and frames sold on the Amazon's UK marketplace. The CMA's decision imposed a fine on Trod of £163,371 for its participation in the cartel. GB eye received immunity, having reported the cartel to the CMA and co-operated with the investigation.
Following this recent decision, the CMA has written to several online companies who it suspects may be denying customers the best available deals by discussing with competitors or agreeing not to undercut them. Even if online markets are considered to be a valuable tool for consumers leading to the most effective competition, it can become an obstacle if suppliers seek to restrict competition between shoppers. The CMA has also warned software providers that they too risk falling foul of competition law if they help their clients use software to facilitate illegal price-fixing agreements. To ensure that the message was understood, the CMA has produced information for online sellers including written guidance which explains what constitute price-fixing and what they can do in order to avoid it. The guidance can be found here.
Therefore, if you are an online seller, bear in mind that you should not:
- agree with your competitors what prices you will charge, or that you won't undercut each other on price
- or discuss your pricing intentions or strategies with competitors.