E-tailers complain of bullying, anti-competitive behaviour from
traditional retail rivals. Report: Jane Lindhe
The Australian Competition and Consumer Commision is
scrutinizing bricks and mortar retailers amid claims that they are
bullying suppliers into avoiding online retail competitors.
Online retailers claim that some large bricks and mortar
retailers use their muscle to engage in anti-competitive practices
such as arranging license agreements that prevent manufacturers
supplying to online retailers, pressuring third parties not to deal
with e-tailers and insisting on minimum resale prices as a
condition of supply.
ACCC chairman Rod Sims has reiterated that the regulator is
closely examining how traditional retailers are dealing with their
suppliers and the impact it is having on competition. He says
bricks and mortar retailer must understand that, "online
technology is revolutionizing competitive dynamics".
"We will do all we can to prevent incumbents misusing their
market power against the many new competitors that will
emerge," Sims said earlier this year.
"The digital economy can provide lower prices, innovative
business models and other potential benefits, including immediacy,
convenience and a wider range of choice. Our aim is to make sure
those benefits are maximised."
The National Australia Bank online retail sales index found that
consumers spent $11.1 billion online in the year to the end of
April - 15.5 per cent more than the previous year. The traditional
retail sector achieved 4.1 per cent.
But the ACCC's threats are having little impact on the
behaviour of traditional retailers. Kogan founder and managing
director Ruslan Kogan says.
In his experience, initial discussions with the sales agent of
major electronics companies are positive, only to fall through at
the eleventh hour because of the bullying tactics of the large,
"Everything will go smoothly then when it comes to the
crunch, they will stop responding to emails. They say
'Let's meet for coffee to discuss this', then tell you
in person that senior management has stopped the deal because
you're online and the tradition retailers don't like
it," Kogan says.
"This practice is hard to prove [to the ACCC] because
suppliers know not to put any of their reasoning in an email. They
don't want to go on the record."
Kogan stocks mainly its own branded products but recently began
selling a limited range of products from international brands such
as Apple Samsung, Sony, Canon and Nikon. It has found dealing
directly with Asia, often the head office of the electronics
companies, much easier than dealing with the Australian arm of
"Asia is a free market and they will deal with you,: Kogan
says. "Australia is a very close market."
Bricks and mortar retailers potentially are breaking tha law
with this behaviour, says competition law with specialist and
partner at Truman Hoyle ACCC will be "a willing ear" for
complaints against anti- competitive behaviour in the future.
"Entrenched retailers can't be allowed to illegally
stomp over the competitive rights of their online rivals,"
"After the moment there is a lingering odour over the state
of competition. Someone will have to clear the air."
Edghill says that besides reminding traditional retailers an
suppliers of the obligations under the Competition and Consumer
Act, international online retailers need to be aware that even
though they are based overseas selling into Australia also makes
Last year a case brought by the regulator saw ticketing agency
Ticketek for taking advantage of its market power to deter or
prevent a newly established online competitor.
The case, according to the ACCC's Sims, highlights the risk
for established business attempting to stop or obstruct an online
But e-tailers such as Kogan are not holding their breath for the
ACCC to further action.
While Kogan's staff are infuriated by the practice and ask
for their complaint about anti-competitive behaviour taken to be
taken or the ACCC, Kogan says that would have little impact.
"I tell my staff that 'dobbing is not our style.
Instead we will wait until the market adjust itself," he says.
"The ACCC can't really do anything. But these suppliers
cannot afford to ignore online forever, not if they want to
increase the volumes and grow."
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