The Competition and Markets Authority (CMA) began investigations back in November 2015 over concerns that there was a restriction to competition in the sports equipment market.
On the 9th June 2016, the CMA brought allegations against sports equipment seller Ping for suspected breaches of competition laws in the UK for prohibiting retailers from selling their gold clubs online.
CMA Senior Director, Anne Pope, explains that:
“…where traditional businesses operating through high street shops face intense competition from online sales, suppliers may be tempted to respond by introducing practices, like online sales bans, that can restrict such competition.”
Whilst introducing online sales bans can help suppliers to increase their profits, such practises can also have an adverse effect on competition in the sector.
Manufacturers, distributors and suppliers all need to ensure they do not engage in anti-competitive activities at any point in the chain. When there is restriction to competition, customers are usually the ones who are the most disadvantaged. For the businesses themselves, they need healthy competition to keep themselves up to speed with the current market and its needs.
Without competition, there may be little or no innovation, and artificially high prices.
Adaptation is key
In a world where the digital market is on the rise for its fast and efficient methods of purchasing, traditional businesses need to adapt appropriately so that both the company and the consumer can benefit from the changing dynamics of markets. It’s fair to say that companies should not be threatened by the internet and should instead use it as an incentive to grow and develop.
Pope discusses the advantages of the digital world and how it can propel businesses into a more competitive world:
“…the internet is an increasingly important distribution channel and retailers’ ability to supply via this channel should not be unduly restricted. This drives competition among rival retailers because they compete to attract consumers who are using the internet to shop around for the best deals.”
The online choice remains very popular
Shopping online is extremely common, and even back in 2013 the online shopping industry was worth over £10 billion.
Some shoppers choose to avoid physical shops altogether now!
By preventing retailers from selling certain products online, a large proportion of customers can be excluded. Ping’s ban on retailers selling certain golf clubs may impact prospective customers who may prefer to use the internet to select and purchase their goods.
The CMA will continue with its investigations and gather more evidence and conduct further analysis before deciding the outcome. The watchdog agency has a number of sanctions at its disposal if it does indeed find that Ping has breached EU and UK Competition laws.
Image Credit: https://pixabay.com/en/golf-ball-golf-ball-golf-club-881332/