Guidance

Price-fixing: guidance for online sellers

Published 7 November 2016

© Crown copyright 2016

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This publication is available at https://www.gov.uk/government/publications/price-fixing-guidance-for-online-sellers/price-fixing-guidance-for-online-sellers

What does price-fixing include?

  • Agreeing with a competitor what price you will charge your customers.
  • It can also include agreements not to sell below a minimum price, or simply agreeing not to undercut a competitor.

Price-fixing is a type of ‘cartel’ - a serious breach of competition law. It can lead to inflated prices and customers being overcharged.

In August 2016, the CMA fined an online seller over £160,000 for breaking competition law. The business had participated in an illegal price-fixing cartel by agreeing with a competing online seller that they would not undercut each other’s prices for products sold on Amazon’s UK website, except where another seller on Amazon UK was cheaper.

The sellers used automated re-pricing software to enable the price-fixing agreement to operate.

What does this mean for online sellers?

Competition law applies to online markets as well as sales through bricks-and-mortar outlets.

Competition law applies to small businesses as well as large ones: the 2 online sellers in this case were small businesses, each with an annual turnover of under £16 million.

Re-pricing software can be used to encourage healthy competition among online sellers, but it’s illegal to use it as part of a price-fixing agreement.

There are serious consequences to breaking competition law - you could be fined up to 10% of your turnover. Individuals involved in cartels can face personal fines, director disqualification and even jail.

Dos and Don’ts

  • Don’t agree with competitors that you won’t undercut each other, or what prices you will each sell your products for.
  • Don’t discuss your pricing strategies with competitors.
  • Do familiarise yourself and your staff with the law. The CMA has a range of short and simple guides to help.
  • Do seek independent legal advice to ensure you comply with the law.

If you suspect others may have broken competition law contact the CMA’s cartels hotline at cartelshotline@cma.gov.uk or by phone on 020 3738 6888.

If you’ve been involved in an illegal cartel you may benefit from lenient treatment by being the first to come forward to the CMA. Read more about applying for leniency for information about leniency benefits, eligibility and conditions.

For more information on competition law see our short videos and advice for businesses.

Please note: this guide does not constitute legal advice and should not be relied upon as such.

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