Competition

Competition and cross platform parity agreements

 

250 pixels wideAcross Platform Parity Agreements are agreements between suppliers and retailers that specify a relative relationship between prices of competing products or prices charged by competing retailers.

These agreements are a special type of price relationship agreements. Price relationship agreements include a wide category of contractual clauses whereby a seller’s price is related/tied to another price, which can be the price offered by other sellers for the same product or similar competing products, or the prices offered by the same seller for the same products to other buyers.  
Across Platforms Parity Agreements are characterised by two elements: (i) a vertical element, because they involve firms at different levels in the value chain, and (ii) a horizontal element, because they link prices of competing goods and/or of competing retailers. Another peculiarity is that the parties to such agreement are suppliers and retailers, while buyers are not and are often not even informed of their existence, even though these agreement concerns the prices the buyers are paying.

The term Platform arises from the fact that often the retailers involved in these agreements are online selling platforms, which can either act as traditional retailers - who pay a wholesale price for a good to the supplier and then set their own retail price, or can be agents – who sell the product on behalf of the supplier at the price this determines and only retain a fee for their service. However, there have been instance of similar agreements between suppliers and brick and mortar retailers.

Despite its reference to Across Platforms, these agreements can be requested by retailers, who requires their supplier not offer their products through other retailers at a lower price (i.e. the price of that supplier’s product should be uniform across different retailers/platforms), but they can also be requested suppliers, who require retailers to charge for its products the same price retailers ass for similar competing products (i.e. the price of competing products sold by a retailer should be the same).

In October 2015, the OECD held a discussion on the key competition concerns that can be raised by these agreements, as well as the benefits these may bring to consumers and how these agreements have so far been dealt with by competition authorities. A background note, a paper by Prof. Ezrachi along with contributions from the participants supported the discussion.

Summary documents

Executive summary with key findings | Synthèse

Detailed summary of the discussion | Compte rendu de la discussion

 

Pannelists, papers and presentations

Morten HVIID
University of East Anglia, United Kingdom
presenting Vertical agreements between suppliers and retailers that specify a relative price relationship between competing products or competing retailers | ppt
[Version française de la note de M. Hviid

Ariel EZRACHI
Oxford University, United Kingdom
presenting The competitive effects of parity clauses on online commerce | ppt

Matthew BENNETT 
Charles River Associates, UK
presenting Platform MFNs: A discussion of the magnitude of harm, benefits and the effectiveness of potential remedies

Antoine WINCKLER 
Cleary Gottlieb Steen Hamilton, Brussels
presenting Platform Parity/MFN clauses under competition law 

 

 

 

 

Contributions from participants

Bulgaria

Chinese Taipei

France French | English

Germany

Hungary

Italy

Latvia

The Netherlands

Sweden

Turkey

United Kingdom

United States

BIAC 

 

RELATED POLICY ROUNDTABLES SEE ALSO

Vertical Restraints for On-line Sales (2014)

Resale Price Maintenance (2008)

Facilitating Practices in Oligopolies (2007)

» Access the full list of Competition Policy Roundtables

Abuse of dominance

Cartels and anti-competitive agreements

» Link to the  OECD Competition Home Page 

 

 

Platform MFNs - A discussion of the magnitude of harm, benefits and the effectiveness of potential remedies

 

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