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The UK Competition and Markets Authority opens an investigation into auction services

On 22 November 2016, the UK Competition and Markets Authority (CMA) launched an initial investigation into suspected anti-competitive practices in relation to the supply of auction services in the UK. In its announcement, the CMA stated that the investigation is focusing on suspected exclusionary and restrictive pricing practices, including most favoured nation provisions (MFNs) in respect of online sales. The CMA has also received an application for interim measures in connection with this case.

MFNs (also known as “most favoured customer”, or “prudent buyer”, or “non-discrimination” clauses) are contractual provisions in which the seller promises the buyer that it will not offer another buyer better terms than those offered to the first buyer. MFNs are increasingly subject to antitrust scrutiny across the globe, in particular in online markets (such as hotel booking, e-books, and price comparison websites). The main concern of the antitrust authorities is that MFNs may increase barriers to entry for new entrants and raise rivals’ costs. MFNs may also deter sellers from offering discounts, since the clauses will require the seller to provide the same discount to all buyers.

The CMA has not yet revealed the identity of the companies under investigation. According to market sources, the CMA’s investigation was prompted by an allegation that the business under investigation is attempting to restrict new competitors from entering the market for online auction services.

The CMA is now conducting an initial investigation to gather information from market participants. It hopes to take a decision on whether or not to proceed with the investigation in May 2017. The CMA is likely to contact auction services businesses with a view to gathering information about their commercial arrangements.

Our competition practice has extensive experience in assessing competition risks and in advising on the impact of anti-competitive behavior by others. If you believe that you may be contacted by the CMA and/or that you may have been affected by the conduct in question, we would be pleased to have a confidential discussion with you to discuss how we may be able to assist. We regularly represent clients before competition authorities and advise on competition law issues in a wide variety of sectors, including online sales.

Yulia Tosheva

Published 13 December 2016