Online seller admits breaking competition law
An online seller has agreed to accept a fine after admitting using automated repricing software to implement an illegal cartel.
Trod Limited has admitted agreeing with one of its competing online sellers, GB eye Limited (trading as ‘GB Posters’), that they would not undercut each other’s prices for posters and frames sold on Amazon’s UK website.
The agreement was implemented by using automated repricing software which the parties each configured to give effect to the illegal cartel.
Trod, based in Birmingham, and GB eye, based in Sheffield, 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, such as One Direction and Justin Bieber.
The cartel applied to posters and frames sold by both parties on Amazon Marketplace via Amazon’s UK website from 24 March 2011 (at the latest) to 1 July 2015 (at the earliest). Amazon Marketplace is an online retail platform that allows retailers to sell their products directly to end consumers via Amazon’s websites.
Following an investigation by the Competition and Markets Authority (CMA), Trod has agreed to accept a fine of £163,371 for taking part in the cartel. This is after deducting a 20% discount to reflect the resource savings to the CMA as a result of Trod’s admission and co-operation with the CMA’s investigation.
Provided it continues to co-operate and complies with the other conditions of the CMA’s leniency policy, GB eye will not receive a fine, having reported the cartel to the CMA and co-operated with the investigation, in accordance with the CMA’s leniency policy.
Amazon itself was not involved in the cartel and has not been investigated by the CMA.
Stephen Blake, Senior Director and head of the CMA’s Cartels and Criminal Group, said:
The internet is an increasingly important way in which people buy products or services in their everyday lives.
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.
The CMA is committed to tackling such anti-competitive behaviour, which jeopardises online markets and consumer trust in e-commerce.
Making sure online and digital markets are working effectively is a particular priority for the CMA. Earlier this year, the CMA investigated two cases where suppliers admitted illegally restricting the prices at which retailers could sell their products online.
Notes for editors
The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK and which may affect trade within the UK. Any business found to have infringed the prohibition in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.
The parties under investigation are Trod Limited (in administration) and GB eye Limited (trading as ‘GB Posters’).
Trod Limited (in administration) has agreed to accept a maximum penalty of £163,371. This is after deducting a 20% discount for settlement.
The fine will not become payable until after the CMA has issued a formal infringement decision imposing the fine and setting out the CMA’s findings in full, together with the basis for the calculation of the fine. The next procedural step is the issue of a formal statement of objections, which is expected later in July 2016.
A party under investigation may ask to enter into settlement if it is prepared to admit that it has breached competition law and is willing to agree to a streamlined administrative procedure for the remainder of the investigation. The CMA may agree to impose a reduced penalty on the business where settlement would achieve clear efficiencies, resulting in earlier adoption of any infringement decision and other resource savings.
The CMA’s investigation was launched in December 2015 with searches of Trod’s business premises and the domestic premises of one of its directors. The CMA’s searches were coordinated with searches by the West Midlands Police on behalf of the US Department of Justice (DoJ) in connection with a separate criminal investigation regarding sales of wall decor in the USA. The US investigation, which is a criminal investigation and concerns both individuals and businesses, is separate from the CMA’s investigation which is a civil investigation into the activities of businesses.
Anyone who has information about a cartel is encouraged to call the CMA cartels hotline on 020 3738 6888 or email firstname.lastname@example.org.
Under the CMA’s leniency policy a business that has been involved in a cartel may be granted immunity from penalties or a significant reduction in penalty in return for reporting cartel activity and assisting the CMA with its investigation. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002. The CMA also operates a rewards policy under which it may pay a financial reward of up to £100,000 in return for information which helps it to identify and take action against illegal cartels. For more information on the CMA’s leniency and informant reward policies, go to leniency and rewards.
The CMA has produced guidance to help businesses understand more about competition law, including what businesses can do to make sure they comply. There is also specific guidance to help small businesses.
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information see the CMA’s homepage.
Enquiries should be directed to Max Malagoni (email@example.com or 020 3738 6690).