Tag: Competition and Markets Authority

All together now: Firms fined for fixing prices of Rangers merchandise

The CMA has imposed fines totalling over £2 million on Elite Sports, JD Sports and Rangers FC after they admitted to fixing the prices of certain Rangers FC merchandise

The Competition and Markets Authority (CMA) has found that Elite Sports and JD Sports broke competition law by fixing the retail prices of a number of Rangers-branded replica kits and other clothing products from September 2018 until July 2019.

Rangers FC also took part in the collusion but only to the extent of fixing the retail price of adult home short-sleeved replica shirts from September 2018 to mid-November 2018. All three firms colluded to stop JD Sports undercutting the retail price of the shirt on Elite’s Gers Online store.

Elite Sports has been fined £459,000, JD Sports £1,485,000 and Rangers £225,000. The penalties include a settlement discount, reflecting resource savings to the CMA as a result of all 3 parties admitting to acting illegally and helping bring a swifter resolution to the CMA’s investigation.

Elite Sports’ and JD Sports’ penalties also include a discount for coming forward with information about their participation in the illegal conduct and cooperating with the investigation under the CMA’s Leniency Programme.

Michael Grenfell, Executive Director of Enforcement at the CMA, said: “At a time when many people are worried about the rising cost of living, it is important that football fans are able to benefit from competitively priced merchandise. Instead, Elite, JD Sports and, to some extent, Rangers, worked together to keep prices high.

“Today’s decision sends a clear message to football clubs and other businesses that illegal anti-competitive collusion will not be tolerated.”

During the time of the infringement, Elite was the manufacturer of Rangers-branded clothing and also sold Rangers-branded products directly through its Gers Online store and later in bricks-and-mortar shops in Glasgow and Belfast. The only UK-wide major retailer selling those products at the time was JD Sports.

The CMA’s investigation found that Rangers FC became concerned about the fact that, at the start of the 2018 to 2019 football season, JD Sports was selling the Rangers replica top at a lower price than Elite, which was seen at the time as the club’s ‘retail partner’.

This resulted in an understanding between the 3 parties that JD Sports would increase its retail price of the Rangers adult short-sleeved home replica shirt by nearly 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.

The CMA also found that Elite and JD Sports – without involvement from Rangers – colluded to fix the retail prices of Rangers-branded clothing, including training wear and replica kit, over a longer period. This included aligning the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect their profit margins.

More information can be found on the case page: Suspected anti-competitive behaviour in relation to the pricing of Rangers FC-branded replica football kit.

CMA to investigate Amazon and Google over fake reviews

The CMA has opened a formal probe into Amazon and Google over concerns that they have not been doing enough to combat fake reviews on their sites.

In this next phase of the work, the Competititon and Markets Authority (CMA) will gather further information to determine whether these two firms may have broken consumer law by taking insufficient action to protect shoppers from fake reviews.

The move comes after an initial CMA investigation, which opened in May 2020, and assessed several platforms’ internal systems and processes for identifying and dealing with fake reviews.

This work has raised specific concerns such as whether Amazon and Google have been doing enough to:

  • Detect fake and misleading reviews or suspicious patterns of behaviour. For example, where the same users have reviewed the same range of products or businesses at similar times to each other and there is no connection between those products or businesses – or where the review suggests that the reviewer has received a payment or other incentive to write a positive review.
  • Investigate and, where necessary, remove promptly fake and misleading reviews from their platforms.
  • Impose adequate sanctions on reviewers or businesses to deter them and others from posting fake or misleading reviews on their platforms – including those who have published these types of reviews many times.

The CMA is also concerned that Amazon’s systems have been failing adequately to prevent and deter some sellers from manipulating product listings – for example, by co-opting positive reviews from other products.

Fake and misleading reviews have the potential to impact on businesses’ star ratings and how prominently companies and products are displayed to consumers, changing their whole shopping experience.

Andrea Coscelli, the CMA’s Chief Executive, said: “Our worry is that millions of online shoppers could be misled by reading fake reviews and then spending their money based on those recommendations. Equally, it’s simply not fair if some businesses can fake 5-star reviews to give their products or services the most prominence, while law-abiding businesses lose out.

“We are investigating concerns that Amazon and Google have not been doing enough to prevent or remove fake reviews to protect customers and honest businesses. It’s important that these tech platforms take responsibility and we stand ready to take action if we find that they are not doing enough.”

If, after investigating, the CMA considers the firms have broken consumer protection law, it can take enforcement action. This could include securing formal commitments from the firms to change the way they deal with fake reviews or escalating to court action if needed. However, the CMA has not reached a view on whether Amazon and Google have broken the law at this stage.

This latest work builds on action taken by the CMA last year over the trading of fake reviews, which resulted in Facebook, Instagram and eBay removing groups and banning individuals for buying and selling fake reviews on their sites.

The CMA’s investigation into fake reviews is part of a broader programme of CMA work, which includes establishing a new pro-competition regulatory regime for digital markets, to curb the power of big tech. This will be achieved through the Digital Markets Unit. As the CMA works with the Government on proposals, it will continue to use its existing powers to their fullest extent in order to examine and protect competition in these areas.

Rocio Concha, Which? Director of Policy and Advocacy, said: “We have repeatedly exposed fake reviews on websites including Amazon and Google, so this investigation is a positive step. The CMA must now move swiftly towards establishing whether these companies have broken the law.

“This should prompt Amazon and Google to finally take the necessary steps to protect users from the growing tide of fake reviews on their platforms and, if they fail to do so, the regulator must be prepared to take strong enforcement action.

“The government must also give online platforms greater legal responsibility for tackling fake and fraudulent content on their sites – including fake and misleading review activity.”

More information about the CMA’s probe into Amazon and Google can be found on the Online Reviews case page.

CMA intervention leads to further Facebook action on fake reviews

  • Facebook to make it harder for people to find groups and profiles that buy and sell fake reviews
  • 16,000 trading groups removed with suspensions or bans for users who create these groups
  • it comes after CMA investigation found more evidence of misleading content

This latest action by the Competition and Markets Authority (CMA) follows reports that fake and misleading reviews continued to be bought and sold on the social media platforms.

In January 2020, Facebook committed to better identify, investigate and remove groups and other pages where fake and misleading reviews were being traded, and prevent them from reappearing.

Facebook gave a similar pledge in relation to its Instagram.com business in May 2020, after the CMA had identified similar concerns.

A follow-up investigation found evidence that the illegal trade in fake reviews was still taking place on both Facebook and Instagram and the CMA intervened for a second time.

Facebook has now removed a further 16,000 groups that were dealing in fake and misleading reviews. It has also made further changes to its systems for identifying, removing and preventing such content on its social media platforms to ensure it is fulfilling its previous commitments.

These include:

  • suspending or banning users who are repeatedly creating Facebook groups and Instagram profiles that promote, encourage or facilitate fake and misleading reviews
  • introducing new automated processes that will improve the detection and removal of this content
  • making it harder for people to use Facebook’s search tools to find fake and misleading review groups and profiles on Facebook and Instagram
  • putting in place dedicated processes to make sure that these changes continue to work effectively and stop the problems from reappearing

Andrea Coscelli, Chief Executive of the CMA, said: “Never before has online shopping been so important. The pandemic has meant that more and more people are buying online, and millions of us read reviews to enable us to make informed choices when we shop around.

“That’s why fake and misleading reviews are so damaging – if people lose trust in online reviews, they are less able to shop around with confidence, and will miss out on the best deals. It also means that businesses playing by the rules miss out.

“Facebook has a duty to do all it can to stop the trading of such content on its platforms. After we intervened again, the company made significant changes – but it is disappointing it has taken them over a year to fix these issues.

“We will continue to keep a close eye on Facebook, including its Instagram business. Should we find it is failing to honour its commitments, we will not hesitate to take further action.”

This move follows the UK Government’s announcement that a dedicated Digital Markets Unit (DMU) will be set up within the CMA from April 2021.

Once the necessary legislation is in place, this will introduce and enforce a new code for governing the behaviour of platforms that currently dominate the market. As part of this process, the CMA has been advising government on the design and implementation of a pro-competition regime for digital markets.

Rocio Concha, Director of Policy and Advocacy at Which?, said: “We’ve previously raised the alarm about fake review factories continuing to operate at scale on Facebook, leaving online shoppers at huge risk of being misled. The tech giant failed to meet its earlier commitment to the CMA, so it is positive that the regulator has stepped in and demanded more robust action.

“Facebook must deliver this time round – it has shown it has the sophisticated technology to eradicate these misleading review groups and needs to do so much more swiftly and effectively.

“The CMA and Facebook now need to monitor the situation and if the problems persist the regulator must take stronger measures to ensure that trust in online reviews does not continue to be undermined.

“Online platforms should also have greater legal responsibility for tackling fake and fraudulent content and activity on their sites.”

For more information on the CMA’s fake reviews work, please see the dedicated webpage: Fake and misleading online reviews trading.

Meerkat misery: big fine for ComparetheMarket

The CMA has fined ComparetheMarket £17.9 million after it found that clauses used in the company’s contracts with home insurers breached competition law.

An investigation by the Competition and Markets Authority (CMA) has concluded that, between December 2015 and December 2017, the price comparison website ComparetheMarket breached competition law by imposing wide ‘most favoured nation’ clauses on providers of home insurance selling through its platform.

These clauses prohibited the home insurers from offering lower prices on other comparison websites and protected ComparetheMarket from being undercut elsewhere. They also made it harder for ComparetheMarket’s rivals to expand and challenge the company’s already strong market position as other price comparison websites were restricted from beating it on price.

As a result, competition between price comparison websites, and between home insurers selling through these platforms, was restricted. The CMA found that this is likely to have resulted in higher insurance premiums.

ComparetheMarket’s clauses meant:

  • The insurers bound by the contracts were prohibited from offering cheaper deals on other price comparison websites. In turn, this limited competitive pressures on all home insurers competing on price comparison websites.
  • Rival comparison sites were restricted in gaining a price advantage over ComparetheMarket, for example, by lowering their commission fees to encourage those insurers to quote lower prices on their platforms.
  • The competitive pressures ComparetheMarket itself was subject to were weakened. Without the clauses, it would have had to compete harder to get lower prices from the home insurers, for example by reducing the commission fees it charged.

Michael Grenfell, the CMA’s Executive Director for Enforcement, said: “Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains.

“It is therefore unacceptable that ComparetheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites – so limiting the bargains potentially available to consumers.

“Digital markets can yield great benefits for competition, and therefore for consumers. We are determined to secure those benefits, and to ensure that competition is not illegitimately restricted. Today’s action should come as a warning – when we find evidence that the law has been broken, we will not hesitate to step in and protect consumers.”

Further information on this investigation can be found on the case page.

Rocio Concha, Director of Policy and Advocacy at Which?, said: “The actions of ComparetheMarket have fallen well below the standard you’d expect from a company who claims to be working in the best interest of consumers, so it is positive to see the CMA intervening to protect consumers and issuing this large fine.  

“Customers should be able to trust that they can find the best deals when using price comparison sites, and any business found to be flouting the rules should be held to account.”

Sainsbury’s – Asda merger deal blocked by regulator

The Competition and Markets Authority has blocked the £14 billion Sainsbury’s – Asda merger after finding it would lead to increased prices in stores, online and at many petrol stations across the UK. Sainsbury’s say the regulator’s rebuff will take £1 billion in savings from customers’ pockets.  Continue reading Sainsbury’s – Asda merger deal blocked by regulator