The Commerce Commission has issued a formal warning under the Commerce Act to Ernie Travers of Massey, Auckland , a Trade Me seller who, in the Commission’s view, attempted to fix prices for LED bicycle lights with another online seller.
The Commission began investigating in September after it received a complaint that Mr Travers emailed a competitor suggesting they both agree to sell the products at a set price. An agreement to fix prices means consumers are likely to pay more than they otherwise would in a competitive market.
Mr Travers’ email to another seller of the same products said: “Hey, how about instead of continually discounting these lights we agree to one price. $189 and stick to it. Post a question as a reply on one of my auctions if you like then no buyers will know about this. I am sure we will both get a share of the market if we are both consistent on the price.”
Mr Travers denied he sent this price fixing comment to his competitor, but could not satisfactorily explain who had sent the comment.
The other seller did not respond to the email, so no price fixing agreement was entered into.
The Commission believes the approach by Mr Travers, who has the Trade Me user name POP0071, may have amounted to an attempt to fix, control or maintain the price of LED Bike Lights contrary to section 80(1) (b) of the Commerce Act. That section of the Act makes it clear that a court may award a penalty against a person who has attempted to breach the restrictive trade provisions of the Commerce Act, such as the provisions against price fixing – even if the attempt has not succeeded.
“This case highlights the need for people who are selling online to be mindful of the Commerce Act. No one selling online should attempt to agree prices with other people who are selling the same or similar products. This means that each online seller should decide on the reserve price and the ‘buy now’ price themselves. Competition then exists between the sellers. Any attempt to lessen competition will be viewed seriously, no matter what the forum, as price fixing agreements are harmful to consumers who end up paying more,” said Kate Morrison , Commerce Commission General Manager of Enforcement.