Online price fixing…..

It may come as no surprise that some sellers on Amazon have been found to be price fixing.

The competition and markets authority, the body that oversees such activity, has announced that it has found evidence of collusion amongst sellers on market places such as Amazon.

It has published a quick list of do’s and don’ts 

  • Don’t agree with competitors that you won’t undercut each other, or what prices you will each sell your products for
  • Don’t discuss your pricing strategies with competitors
    Do familarise yourself and your staff  with the law. The CMA has a range
    of short and simple guides to help 
  • Do seek independent legal advice to ensure you comply with the law.

None of this will be news to those in the know. We have already experienced one ‘member’ of our industry being ‘done’ for price fixing(fine £171,000) But what is rather more interesting is that the CMA has fined a supplier for threatening online retailers….

In April the CMA fined Ultra Finishing £826,000 for threatening online retailers with penalties if they charged below the company’s recommended price for bathroom supplies.

This is much more interesting in that it suggests suppliers have to be very careful in the manner in which they treat their customers who maybe trading their product in a manner that may disturb their retail market. It is a double edged sword. 

Yet, I get a little confused by it all. How, for example, does a brand  like Apple manage to control their pricing without breaking the CMA regs ? And if they don’t comply why aren’t they prosecuted ?

Most suppliers take a responsible attitude towards pricing,  in order to try and maintain reasonable profit margins for all those within the distribution chain. Without reasonable margins the chain eventually disappears. Yet there appears to be a fine line between legitmate pricing policies and price fixing. 

Yet more confusion reins down on my little head, whenever, national retail chains launch ‘Sales’ when in many cases they have patently bought in stock for the sale. Whilst this is not price control, it surely must be on the edge of pricing morals.

Whilst the existence of a CMA type organisation has to be has to be lauded, to tryto ensure that the consumer is offered the best possible market price. Unintended consequences  can result in the opposite . In any one market, if margins are reduced by legal structures too far, it can eventually reduce competition and as that competition disappear, the price rises.

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