OFT welcomes Amazon’s decision to end price parity policy

29 Aug 2013 02:06 PM

The OFT welcomes Amazon’s decision to end its price parity policy, which restricts its sellers from offering lower prices on other online sales channels, across its Marketplace in the European Union from 30 August 2013.

Following numerous complaints, the OFT opened a formal investigation into Amazon’s price parity policy in October 2012. It was concerned that the policy was potentially anti-competitive. In particular, such policies may raise online platform fees, curtail the entry of potential entrants, and directly affect the prices which sellers set on platforms (including their own websites), resulting in higher prices to consumers. In light of Amazon’s decision, the OFT is currently minded to close its investigation on grounds of administrative priority.

The OFT has not reached a decision as to whether there has been an infringement of competition law.

The OFT continues to monitor the online retail sector and may use its power to investigate such price parity policies at any time. Throughout its investigation, the OFT has co-operated closely with the German Federal Cartel Office, which has been running a parallel investigation into Amazon’s policy, and has recently made a related announcement.

Cavendish Elithorn, OFT Senior Director of Goods and Consumer, said: ‘We welcome Amazon’s decision to end its Marketplace price parity policy across the European Union.

‘As Amazon operates one of the UK’s biggest e-commerce sites, the pricing on its website can have a wide impact on online prices offered to consumers elsewhere. We are pleased that sellers are now completely free to set their prices as they wish, as this encourages price competition and ensures consumers can get the best possible deals.

‘The OFT recommends that other companies operating similar policies review them carefully. Businesses concerned that they are being prevented from setting their own prices should not hesitate to contact the OFT.’

Notes

1. Since early 2010, the OFT has received numerous complaints regarding the price parity requirement in the agreements between Amazon and third party sellers trading on the Amazon.co.uk Marketplace platform. Many such complaints were from third party sellers who were concerned that such arrangements restricted their ability to set prices on their own websites or other online sales channels.
   
2. In October 2012, the OFT launched a formal investigation into whether the price parity requirement contravenes Chapter I of the Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union. The OFT was concerned that the parity requirement might be anti-competitive because it could raise platform fees, curtail entry by potential entrants as well as directly affect the prices which sellers set on platforms (including their own website). View the case summary. The OFT is minded to close its investigation on grounds of administrative priority.
   
3. During the course of the investigation, Amazon informed the OFT of its plans to end its Marketplace price parity policy in the European Union. In particular, Amazon informed the OFT that, from 31 August 2013, it will: (i) discontinue enforcement of contractual price parity obligations as to all European Union Marketplace sellers; (ii) remove the Marketplace price parity policy clauses from all current versions of Amazon’s click-through agreements across the European Union; and (iii) notify all other current European Union Marketplace sellers on individually negotiated agreements that it has ceased enforcement of the price parity obligations with the intention of removing the provisions from those agreements when they are next renewed. The OFT understands that Amazon’s Marketplace price parity policy remains in place elsewhere, such as in the USA.
   
4. The online retail sector continues to be a key priority for the OFT. The OFT recently found that agreements between a manufacturer of mobility scooters and certain online retailers, which prevented the online sale and advertising of prices of the manufacturer’s mobility scooters by those retailers, breached competition law. It has also recently published proposed commitments relating to the online hotel booking sector.
   
5. The OFT currently has 14 cases open under the Competition Act 1998.
   
6. Businesses concerned that they are being restricted from setting their own prices are encouraged to contact the OFT.