16 August 2016
A few days ago, the CMA issued a decision confirming that two Amazon Marketplace vendors had fixed prices by using and configuring “commercially-available automated repricing software”. The vendors, Trod Limited and GB eye Limited, which sell licensed sport and entertainment merchandise adorned with images of popular stars like Justin Bieber and 1D, colluded to offer online shoppers the same prices for products and co-ordinate price changes.
Although the CMA accepts that online pricing tools can “help sellers compete better, for the benefit of consumers”, thereby benefiting competition, in this instance, the parties applied these tools to illegally fix prices at an artificially high level. The CMA fined Trod £163,371, reflecting a 20% discount for Trod’s admission of liability and co-operation during the investigation. GB eye, however, obtained 100% immunity for ‘whistle-blowing’, reflecting the CMA’s continued support for companies who come forward first.
The CMA opened its investigation last year following a dawn raid at Trod’s premises and the home of one of its directors. The CMA’s searches were co-ordinated with searches carried out by the British police on behalf of the US Department of Justice who were investigating the same conduct for sales through Amazon’s US Marketplace. Following the dawn raid, the DoJ prosecuted both Trod and its director for price-fixing. Trod accepted liability in the US as well, pleading guilty a few days ago (the DoJ has not yet provided details of any sanctions), but the director is still awaiting trial. This provides an important reminder of the wider ramifications that anticompetitive behaviour can have, resulting in criminal sentences as well as civil fines and/or director disqualification.
The CMA's investigation is yet another example of the authorities’ focus on digital markets, complementing the Commission’s e-commerce sector inquiry (see here and here). The case follows in the footsteps of the CJEU’s Eturas decision which established the potential for liability for participants in a platform which fail to distance themselves from automated pricing updates (see here). While the price-fixing agreement itself is hardly novel, the use of software to implement the agreement is more ‘innovative’ – and will doubtless not be the last such case to come before the competition authorities.