There’s a lot of talk about the “race to the bottom” in price on Amazon thanks to fierce competition in most categories. Some third-party merchants responded by colluding to limit price competition, according to the US and UK governments, which claim the sellers acted illegally and have brought charges against them.
The latest development in the ongoing story: a UK seller agreed to accept a fine after admitting to using automated repricing software to implement an illegal cartel, according to the UK’s Competition and Markets Authority (CMA).
“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,” the CMA warned in its announcement last week.
The US Justice Department’s Antitrust division also investigated price fixing on Amazon, alleging that a ring of third-party merchants fixed pricing on certain posters sold through the Marketplace over a period of time from September 2013 through January 2014. Read more in this Newsflash article from last year.
On a blog post about the DOJ investigation last year, one seller wondered about the government’s decision to go after “small fry,” pointing to industries harboring “massive corruption.”
The UK government alleged that two sellers sold licensed sport and entertainment merchandise and related products, including posters, frames, badges, stickers and mugs, with popular images from the sport and entertainment world.
“Online pricing tools, such as automated repricing software, can also help sellers compete better, for the benefit of consumers,” the agency wrote. “In this case, however, the parties used repricing software to implement an illegal agreement to deny consumers these benefits.”
In January, the Daily Mail had put the UK seller’s revenue at over 15 million pounds with a profit of over 125,000 pounds.
In the same article, the newspaper said the seller faced possible extradition to the US, however, there was no mention of extradition in the UK government’s announcement last week.
What about the other UK seller allegedly involved in the pricing activity? “The other party to the cartel, GB eye, reported the cartel to the CMA under the CMA’s leniency policy and will not be fined, provided it continues to co-operate and complies with the other conditions of the CMA’s leniency policy.”