A seller on the popular ecommerce platform Amazon Marketplace has accepted a fine of £163,371, after admitting using automated repricing software to set up an illegal cartel.
Trod Limited, which sold licensed sport and entertainment merchandise, agreed with one of its competitors, GB eye Limited, not to undercut each other’s prices for posters and frames sold by both firms on Amazon’s UK site. Both parties used automated repricing software to establish the cartel.
GB eye reported the cartel to the Competition and Markets Authority (CMA) under the CMA’s leniency policy. Accordingly, it will not be fined providing it continues to cooperate and complies with the conditions of the leniency policy. The £163,371 penalty imposed on Trod (in administration) included a 20 per cent discount for Trod’s admission and cooperation with the CMA investigation. Amazon itself was not involved in the cartel and was not investigated by the CMA.
The CMA’s Senior Director, Stephen Blake, said: “Online marketplaces such as Amazon allow sellers to sell their goods directly to consumers, who often benefit from more choice and lower prices as a result. Online pricing tools, such as automated repricing software, can also help sellers compete better, for the benefit of consumers. In this case, however, the parties used repricing software to implement an illegal agreement to deny consumers these benefits.
“Sellers on online platforms need to be aware that agreeing with each other to limit price competition in this way is illegal and can have serious consequences for the companies and individuals involved.”
Businesses that breach competition law can face serious financial and reputational consequences. Certain serious breaches of competition law may also put individuals at risk of criminal prosecution. The Competition Act 1998 and the Enterprise Act 2002 are the two principal sources of competition law in the UK.
What constitutes a breach of competition law?
UK competition law covers all types of arrangements between competitors designed to reduce competition between them, including:
- Any understanding or agreement about price levels or increases.
- Agreements about the outcome of a tender or pitch process (for example, agreeing who will bid or who will bid the best price).
- Agreements to allocate particular customers or sales territories to certain businesses.
- Sharing confidential or commercially sensitive information. For example, prices, margins, customer data or sales information.
For expert legal advice on competition law please contact one of our specialist solicitors: