Cartels fixing price of online shopping, watchdog warns

Feb, 02   -   No Comments   -   Candice

Consumers looking for a bargain online before Christmas could be shortchanged by sellers colluding to fix prices, the competition watchdog has warned.

The regulator said it had taken action after finding evidence of collusion in some online marketplaces. It has written to sellers it thinks are in cartels, where members agree not to undercut each other or agree on the price they should all charge customers, requiring them to make commitments to stamp out the practice.

The warning comes as retailers prepare for their busiest time of the year, kicked off by the imported American custom of “Black Friday” on November 25, where goods are heavily discounted online for one day only.

The Competition and Markets Authority (CMA) has not provided the names of the companies or what products they are selling, but is giving the warnings in the hope that a full inquiry will not be needed.

Stephen Blake, senior director of the CMA’s cartels and criminal group, said: “Online markets are a hugely valuable tool for consumers to shop around and find the best-value products, making the most of effective competition. But these benefits are put at risk if the suppliers seek to restrict competition between them. Entering into agreements that limit price competition cheats consumers, is illegal and can have serious consequences for the companies and individuals involved.”

The CMA said that online marketplaces were helping to distribute its advice to sellers, although it did not provide any names.

It has made its advice available online, where it has warned potential price fixers of a £163,371 fine that it imposed in July on Trod Ltd, a frame and poster seller using Amazon Marketplace, for colluding with a competitor. Amazon was not investigated, nor did it have any involvement with the cartel.

In another case in April, the CMA hit Ultra Finishing, the bathroom supply company, with an £826,000 fine for requiring retailers not to discount its products, including charging them higher prices, withdrawing their rights to use Ultra’s images online or stopping supplying them.

At the time, Ann Pope, the CMA’s senior director responsible for the case, said: “Price competition from online sales is usually intense, given the ease of searching on the internet. Ultra’s practice of setting minimum online prices stopped retailers from offering discounted prices online, reducing competition across online and ‘bricks and mortar’ sales, and denying consumers the benefit of lower prices for Ultra’s bathroom fittings.

“The CMA takes such vertical price-fixing seriously and is focused on tackling anti-competitive practices that diminish the many benefits of e-commerce.”

The regulator said that it thought the practice of “retail price management” in bathroom supplies was widespread, but hoped that the fine given to Ultra would deter other companies.

In its advice on price fixing, the CMA warned of the “serious consequences” of breaking competition law, including companies being fined up to 10 per cent of their turnover. Individuals involved in cartels could also be fined, disqualified from acting as directors or jailed.

Mr Blake added: “The majority of online sellers want to comply with the law. 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.”