The UK's main competition law enforcement authority, the Competition & Markets Authority (CMA) has intervened to resolve competition law concerns in the fast-growing online auction house sector. This is part of its drive to ensure that online commerce complies with competition law as much as traditional offline businesses.

In August / September 2016, the CMA received two separate complaints, alleging that ATG Media - the largest provider of live online bidding platforms in the UK - had engaged in anti-competitive conduct in regards to the provision of live online bidding auction platform services.

The concerns were that ATG Media may have been excluding rivals from the market by:

  • requiring exclusivity from its auction house customers (that is, stopping them from also using competing platforms);
  • preventing its auction house customers from allowing bidders to use rival platforms at lower cost (a form of 'most favoured nation' or 'parity' provision);
  • preventing auction houses from advertising and promoting the services of competitors to ATG Media.

The CMA responded to those complaints in November, by launching an investigation into suspected breaches of the prohibitions on anti-competitive agreements and the abuse of a dominant position, both under UK and EU legislation (i.e. Chapters I and II of the Competition Act 1998 and Articles 101 and 102 TFEU).

In May, rather than contesting the allegations and allowing the investigation to proceed any further (and facing the risk of potential fines), and although its position was that it had not infringed the competition rules, ATG Media offered legally binding assurances (known as 'commitments') to the CMA that it would remove all of these restrictions. The CMA said that it considered that the proposed commitments addressed the competition concerns identified. However, the CMA first invited comments from those who are likely to be affected.

On 29 June 2017, the CMA published a decision to accept the binding commitments offered by ATG Media in relation to what the CMA regarded as "suspected exclusionary and restrictive pricing practices, including most favoured nation provisions in respect of online sales." The CMA therefore terminated its investigation, with no decision made as to whether or not the competition prohibitions under UK or EU law had been infringed. 

On 13 July 2017, the CMA published two pieces of guidance to help auction houses and others understand the commitments made by ATG Media. The two guidance documents are useful, in that they are designed to explain:

In summary, ATG Media agreed to stop:

  • asking auction houses to use only its platforms and no others;
  • offering discounts or benefits to customers if they agreed not to use other live online bidding platforms, or charge higher prices and / or withdraw services to those that did;
  • requiring auction houses, if they used a rival live online bidding platform with a lower commission rate alongside ATG Media's live online bidding platform, to charge bidders using ATG's platform the same lower commission rate, while still paying ATG Media the higher commission; and
  • preventing auction houses from advertising other live online bidding platforms (e.g. on their website or in their auction room).

As part of its process, the CMA has published an analysis of the online auction house market and of ATG Media's position in that market. Interestingly, the CMA concludes that nearly all the platforms offering services to UK auction houses are UK-based. It also concluded that ATG Media is likely to have a dominant position in this UK market.

For those active in the sector who may have similar concerns, such as the potential abuse of a dominant position, or who may be thinking of making an acquisition in the sector, we now have a better idea of the CMA's framework of analysis and likely market definition. Therefore, any such plans would need to fit within the framework now established by the CMA, subject to advice from external competition law specialists. Stephenson Harwood's London-based competition team, headed by Marta Garcia, would be happy to discuss these issues further with anyone interested in them.

First published 02 Nov 2017.

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