There are now just days to go before a decision on the EU ‘Vertical Restraints’ Regulation. If approved in its current draft form, this legislation would allow brand manufacturers to impose restrictions on sellers who do not have a physical, ‘brick and mortar’ shop.
This blog believes that online-only outlets can offer a professional, high quality and economically sound way to shop and should not be put at an unfair disadvantage against high street buildings.
We urge people to contact the European Commission’s competition section and their Member of the European Parliament to protest against the proposed discriminatory change.
[Disclosure: the Campaign for Consumer Choice is supported by eBay]
There are a number of anecdotal examples of brand owners trying to bully online retailers and restrict them from selling their products online. However, it’s not often that these practices restricting consumer choice are identified and penalized through fair trade laws.
But this is exactly what has happened recently in Germany. Last month the German competition regulator, the Bundeskartellamtd fined the contact lens manufacturer, Ciba Vision, €11.5m for trying to prevent online retailers selling its contact lens products, in particular on eBay.
The investigation by the Bundeskartellamt also discovered that CIBA Vision operated a system that sought to keep retail prices unfairly high on eBay.
It emerged that CIBA Vision used a number of people whose role was to monitor eBay sellers’ prices and report those retailers that were undercutting the manufacturer’s recommended retail prices (RRP). CIBA Vision then requested that sellers raise their prices in line with the RRP. This practice was used successfully over a period of time.
According to German competition law, manufacturers are allowed to suggest retail prices for sellers, but that are forbidden from requesting that retailers enforce them. As a result of CIBA Visions systematic abuse of this law, their actions have caused illegal price fixing.
CIBA Vision denies being guilty of the charges against it, but it has also told the competition regulator that it won‘t take legal action against the fine either.
The magazine Computer Reseller News interprets the fine as a success for eBay‘s campaign against anti-internet trade practices.
Have you got any examples of similar attempts by brands to limit consumer choice online? Let us know in the comments below.
Picture (c) CIBA Vision
Posted by simon, 16.10.09
The Consumer Choice campaign is calling on the European Commission to ensure that when it amends its Vertical Restraints Regulation and Guidelines consumers and small businesses aren’t the victim of unfair trade practices that ignore the power of the internet to increase the level of choice and value available.
We’ve written about some of the ways in which brands are unfairly pressuring online sellers in other EU countries to fix their prices to keep brands’ profits up and consumer savings down. But what about the UK?
The summer edition of eBay’s Online Business Index included the findings of an investigation, How Suppliers Are Blocking Online Trade, which examined the experiences of small businesses that sell online and the barriers they face to trade fairly.
The investigation revealed that half of the online retailers interviewed said they had faced pressure from suppliers to restrict trade.
It also gave a shocking insight into the range of tactics used by suppliers to force online retailers to keep prices high.
These tactics include:
Preventing retailers from discounting goods – Nearly half (45%) of sellers interviewed were told what price to charge, limiting their ability to offer discounted goods to consumers.
Complicated display criteria – A third (32%) of online retailers reported that suppliers make it hard to sell online by setting complicated conditions on how their goods are displayed. In some cases this even included stipulating how many pixels there must be in each image.
Banning sales on the internet – Half of online retailers (49%) reported that suppliers tried to prevent them from selling their goods on the internet or certain websites. For example, some suppliers insert clauses into contracts explicitly banning such sales.
We believe that these attempts by brands and suppliers to restrict online retail are short-sighted given the growing power of the internet but it’s undeniable that small businesses are on the receiving end of aggressive and bullying tactics. What’s worse is that many small sellers have no choice but to comply, for fear their supplies will be cut off.
It’s a worrying situation for online businesses and consumers alike and one our Campaign for Consumer Choice has set out to address.
You can help end these unfair and uncompetitive practices by signing our petition
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