Across 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.