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Amazon says farewell to price parity

Amazon says farewell to price parity

Both the British and German competition authorities have stated that Amazon no longer requires its traders to offer their products on Amazon for the lowest prices. Both competition authorities are currently investigating whether requiring a best price guarantee, also referred to as price parity, is in violation of competition rules.

Bundeskartellamt
The German competition authority, the Bundeskartellamt, is now looking into whether the measures announced by Amazon are enough in terms of form, content and scope to stop its investigation against Amazon. This requires among other things that Amazon definitively abandon price parity and that recidivism can be excluded.

Office of Fair Trading
Like the Bundeskartellamt, the British competition authority, the Office of Fair Trading, has not yet decided whether Amazon violated competition rules by requiring price parity. In general the Office of Fair Trading believes that price parity can prevent access to the market for online sales. Price parity furthermore has a direct impact on the prices, which can result in higher prices for the consumer. In the light of Amazon’s decision to abandon price parity, the Office of Fair Trading is considering closing its investigation against Amazon.

It is notable that in the press release, the Office of Fair Trading calls on online portals which still require price parity to carefully reconsider their policy. Businesses that are of the opinion that they are being prevented from setting their own selling prices are also encouraged to contact the Office of Fair Trading.

Conclusion
With its promise, Amazon is following suit from the booking sites and a hotel group which a few months ago made agreements with the Office of Fair Trading on the online sale of hotel rooms. It should be pointed out here that Amazon’s promise goes further than that given by the booking sites and the hotel group. Amazon will no longer be applying price parity at all, while the booking sites and hotel group only enable discounts for a certain group of consumers.

Furthermore, the current response from the Office of Fair Trading in particular shows that those conducting commerce via online portals should generally keep in mind that they are being watched by the competition authorities. The Bundeskartellamt responded in July in a similar manner. Although the British and German competition authorities have not yet taken a final decision, both regulators seem to be of the opinion that the best price guarantee is in violation of the prohibition of cartels. Amazon will also have realised this, otherwise it would never have promised to abandon its price parity policy. Operators of online portals have been warned therefore.

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