Price-fixing on Amazon Marketplace targeted by US antitrust enforcers

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

"We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms"

On 6 April 2015, the Antitrust Division of the U.S. Department of Justice ("DOJ") announced its first prosecution specifically targeting the e-commerce sector. The case concerns David Topkins, a former employee of an online art retailer, who conspired with competitors to fix the prices of certain posters sold through Amazon Marketplace.

According to DOJ papers (available here), Topkins and his competitors engaged in discussions to agree the sale price of specific posters. In order to implement their agreement, Topkins developed a pricing algorithm which was adopted by each of the parties.

This case demonstrates that competition law enforcers are alive to the ways in which technology can be used to manipulate online pricing in breach of competition law. Assistant Attorney General Bill Baer of the DOJ's antitrust division stated: "We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms". (See further here.)

This case should serve as a warning for online retailers in Europe who are facing increased scrutiny by the national competition authorities as well as a forthcoming European Commission inquiry into the e-commerce sector (see here).