Business

Saturday 26 July 2014

Amazon lifts ban on cheaper sales

Published 29/08/2013|15:04

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Amazon boss Jeff Bezos

Amazon has ditched a controversial policy banning firms that trade on its website from selling goods more cheaply elsewhere after an investigation was launched by regulators.

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The Office of Fair Trading (OFT) said it welcomes the decision by the online retailer to end its "price parity" policy across the European Union, though it will remain on Amazon's sites in the US and elsewhere.

The OFT said it is "concerned that the policy was potentially uncompetitive", directly affecting the prices which sellers set on platforms including their own websites, resulting in higher prices for consumers.

After numerous complaints from traders using the amazon.co.uk Marketplace platform, dating back to early 2010, the regulator opened a formal investigation into the price parity policy in October last year.

The retailer says on its website that the rule is "critical to preserve fairness for Amazon customers" who expect to find low prices.

But the OFT said that during the course of the investigation, the retailer informed it that from August 30 it was ending the enforcement of the obligation on sellers and removing it from agreements.

The regulator said that in the light of the move it is "minded to close its investigation" as it is no longer a priority, and that it has not reached a decision about whether there was an infringement of competition law.

It has cooperated closely with the German Federal Cartel Office which has been running a parallel investigation and recently made a related announcement, the OFT said.

"We welcome Amazon's decision to end its Marketplace price parity policy across the European Union," said Cavendish Elithorn, OFT senior director of goods and consumer.

"As Amazon operates one of the UK's biggest e-commerce sites, the pricing on its website can have a wide impact on online prices offered to consumers elsewhere.

"We are pleased that sellers are now completely free to set their prices as they wish, as this encourages price competition and ensures consumers can get the best possible deals.

"The OFT recommends that other companies operating similar policies review them carefully. Businesses concerned that they are being prevented from setting their own prices should not hesitate to contact the OFT."

Amazon was contacted but has yet to provide a comment.

It is not the first time the retailer has faced flak over its corporate practices. It has been heavily criticised for its tax arrangements.

Last month Amazon announced a surprise dip in earnings as it swung to a loss of $7m (€5.3m) for the second quarter of the year, down from a $7m profit for the same period of last year.

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