UK Competition and Markets Authority launches initiative to ensure online sellers comply with UK competition law

Shares

On 7 November, the UK Competition and Markets Authority (CMA), responsible for UK competition enforcement, launched an initiative to warn online sellers in the UK about the dangers of breaching competition laws, and in particular, of engaging in price-fixing behavior. This initiative is being promoted ahead of Black Friday, a major event in the online selling sector in which retailers significantly discount prices, which will take place on 25 November. Given that the UK is the largest e-commerce market in Europe, this must be viewed as particularly significant.

UK is leading e-commerce in Europe

The UK is a leader in the e-commerce sector, with the largest e-commerce market in Europe, with total B2C e-commerce in 2015 of €157.1 billion, according to the 2016 Ecommerce UK B2C and the European B2C reports. It also has the highest eGDP in Europe. Given the size of the e-commerce market in the UK, the decisions taken by UK-based regulators and shifts in the behavior of UK-based sellers will have a particularly large impact on the European e-commerce sector as a whole.

The dangers of price-fixing

In its guidance to online sellers, the CMA highlights a recent case regarding price-fixing between online sellers, which in August 2016 resulted in the CMA issuing a fine of £160,000. Two firms had used automated re-pricing software to ensure that they did not undercut each other’s products on the Amazon UK website. Stressing that both the firms involved in the case were SMEs, the CMA wishes to emphasize that smaller firms can be in breach of competition regulation as well as large firms. The CMA has published a case study with further information on this specific case.

The CMA wishes to make online sellers aware of the fact that price-fixing regulations that apply in the brick-and-mortar world are equally valid in the online sector. It therefore implores online sellers to not agree pricing with competitors, make deals about not undercutting each other’s prices, nor even discuss pricing strategies with competitors, all of which are breaches of competition law. Fines of up to 10% of annual turnover could be incurred in the case of such breaches.

Stephen Blake, Senior Director of the CMA’s Cartels and Criminal Group, said of the initiative: ‘The CMA is strongly committed to tackling anti-competitive behavior in online markets. We recognize that 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.’

Shares