23rd June 2016

Competition law: online sales

On 9 June 2016 the CMA said it had sent a statement of objections to Ping Europe Limited alleging that Ping had breached UK and EU competition law by operating an online sales ban.

The CMA has referred to provisional findings, and no final conclusion has been reached. The statement of objections issued to Ping in very general terms refers to a ban preventing retailers from selling Ping golf equipment online. The response to the allegations is awaited.

The CMA press release sets out its concerns as to any business being "tempted", when faced with competition from online sales, to seek to ban sales online of its products, which could restrict competition.

The CMA’s Senior Director responsible for this case said: “The internet is an increasingly important distribution channel and retailers’ ability to supply via this channel should not be unduly restricted. This drives competition among rival retailers because they compete to attract customers who are using the internet to shop around for the best deals. Bans on internet trading can be a problem if they seek to prevent retailers reaching a significant proportion of customers.”

The European Court of Justice has recently been asked by an appeal court in Germany to clarify the application of the competition rules to online sales arising from a dispute between a German distributor and the supplier of beauty products. The decision is expected within the next 12-15 months.

In summary, any business seeking to ban online sales of its products will need to carefully consider if this practice is a breach of competition law; any business found to have infringed the law may be fined up to 10% of its annual worldwide group turnover. Further, those businesses found to have breached competition law can be subject to claims by third parties and individuals; individuals in such businesses can be subject to a custodial sentence and a director disqualification.

For help and advice on competition law issues, please contact David Patterson.

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