CMA warns businesses to be alert to breaches of competition law with shift to online selling

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11/11/2016

Dr. Andrea Coscelli, the Acting CEO of the Competition and Markets Authority (CMA), warned businesses need to be alert to breaches of competition law as a result of evolving organisational structures and a shift to online selling.

“The development of online sales channels means businesses need to be more alert than ever to the risk of anti-competitive behaviour. Online resale structures and price monitoring means that businesses may be placing themselves at risk of breaching competition law.” said Dr Coscelli.

Dr. Coscelli’s comments came after he met with competition law specialists in Leeds to discuss the enforcer’s progress and priorities for the coming year. The CMA has taken a number of recent enforcement actions against businesses for engaging in unlawful online practices.

Most recently, the CMA issued a warning to businesses selling online not to discuss or agree to fix prices following a fine of over £160,000 against Trod Ltd., a Birmingham-based online retailer of popular sport and entertainment merchandise. Trod had agreed with another seller that they wouldn’t undercut one another when selling on Amazon Marketplace.

The visit of Dr Coscelli is well timed. Recent research conducted for the CMA across the UK regions suggested that, in certain areas of the North of England, awareness of competition law is low:

  • 42% of Yorkshire and Humber businesses did not know that price-fixing could lead to imprisonment;
  • 47% of Yorkshire and Humber businesses did not know that bid-rigging is illegal; and
  • 71% of Yorkshire and Humber businesses did not know that setting the price at which your customers can resell your product is illegal.

Trudy Feaster-Gee, competition law specialist at Walker Morris commented:

Online selling can offer great opportunities for suppliers and customers alike. In improving consumer choice and helping to stimulate price competition, it is a sales channel supported by competition regulators and this is reflected in the CMA’s enforcement priorities. All suppliers should be mindful of the rules as to what restrictions they can and cannot impose on resellers operating online and through bricks and mortar outlets. It is certainly worthwhile undertaking a competition law health check of contract documents and introducing practical guidance for their sales teams.”    

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