Online advertising restrictions in the spotlight again

03.04.2014

Following on from the Roma-branded Mobility Scooters case earlier this year, the OFT has announced a second decision on mobility scooters. The full text is not yet available, but it is clear that in Pride the OFT’s concerns were similar insofar as online advertising was concerned.
Various OFT guidance (now also adopted by the CMA) has long emphasised that restrictions on advertising can be potentially problematic, in particular if parties are prevented from advertising prices, or prices below a minimum or recommended level (see paragraphs 3.24 here and 3.14 here). This was also made abundantly clear in the OFT’s 2003 decision in Lladró (see paragraphs 68-77). The importance placed by the OFT on preserving consumer trust in online markets was also stressed in a 2010 market study on online behavioural advertising and price targeting (see Chapter 5).
It is therefore hardly surprising that Pride’s conduct was sanctioned. Between 2010 and 2012, Pride had entered into arrangements with eight of its UK-wide online retailers in respect of certain mobility scooter models. These prevented the retailers from advertising prices online which were lower than Pride’s Recommended Retail Price (RRP). The OFT directed the parties to bring any sucharrangements to an end and to refrain from entering into similar arrangements in the future. All parties concerned benefited from the immunity for ‘small agreements’ provided for in the Competition Act 1998 – no financial penalties were imposed.
We are likely to see similar cases in the near future for (at least) two reasons.
• First, the CMA will clearly continue to focus on online and emerging business models. Its Annual Plan for 2014/15 highlights consumers’ increasing use of the internet to compare products, goods and services and stresses the importance of ensuring that consumers have confidence in online markets. The CMA also launched a ‘big data’ research project yesterday designed to identify sectors of the economy where online commerce is developing more slowly than might be expected, so it can investigate whether this is the result of anti-competitive behaviour (see the ‘Extend competition frontiers’ subheading).
• Second, both the Roma and Pride decisions stressed that consumers with limited mobility may find it difficult to visit more than one physical store. The CMA’s recent Prioritisation Principles explicitly note a concern for ‘disadvantaged’ consumers, who may be particularly vulnerable to exploitation.
Anyone looking at advertising restrictions would therefore be well-advised to bear in mind the relevant consumer demographic. This will be relevant to those involved in the distribution of healthcare products.