Competition Law

[Reegold]

QUESTION:

You are the lead counsel for Framed & Famous (F&F), a firm that sells in the UK and globally, framed curious and funny pictures of famous people that would appeal to young adults. Their business is mainly conducted online, via Amazon Marketplace. Their investigations have revealed that a number of companies appear to be coordinating their prices of framed pictures on Amazon. The online market for the sale of these is expanding and just in the case of young adults’ sector, it is globally worth US$2 billion and increasing. F&F was historically the dominant firm in the market globally until it was taken over by a newcomer and recently saw its worldwide market share drop from 40% to 20%.



The newcomer in the market and F&F’s current main competitor is Modern Art Ltd. (MAL) headquartered in the UK but with subsidiaries in the USA and in Paris. From 2017 to date, MAL has been conducting its business of selling framed pictures, posters, prints and framed artwork and other objects using photos in the UK and worldwide. MAL has had a meteoric rise since joining the market.



During this period, MAL has been in discussion with other similar businesses about pricing of its artwork. The prices of the artwork sold by MAL and these businesses appear, from the publicly available information, to be maintained and stabilised on Amazon Marketplace by using pricing algorithms for certain products categorised as Monitored Art Products (MAP) that coordinated the prices of MAP. Most of MAP are sold within the UK and the USA. The global market share of MAL and such other businesses is currently 70%.



F&F has been told that the managing director and the chief executive officer of MAL, one Richard Whittington, wrote a computer programme that set up an algorithm to maintain the prices of MAP. F&F’s chief operations officer was approached recently by Richard Whittington to join in the group of businesses using his algorithm so that F&F’s too can benefit from stable market prices for MAP sold by it. F&F may have to share with Whittington and MAL some sensitive data such as pricing related information.



F&F’s board of directors are deliberating on joining in the use of the algorithm. It may be advantageous to them as they will not have to constantly undercut prices to keep up with the competition of MAL and others. Some members of the board believe that so long as F&F’s does not actively fix prices of each item or even understand how the algorithm works, there is no risk of anti-competitive behaviour in agreeing to the use of the algorithm. However, some board members are also concerned that it might place F&F in breach of competition laws in the EU and the USA.



Please advise F&F’s board of directors on the pros and cons including whether or not F&F’s conduct is likely to be held anti-competitive in the EU and in the US and why.

[MallyJ]

What do you think?

[woofgang]

Too long. Too dull. No "please" or "thank you"

[EDDIE51]

This is a VERY competative and complex area of Law !
It is currently with some of the finest and most expensive legal,mindsin the World !!!
Hardly for us Mortals !!
Also the EU and USA are likely to take TOTALLY different views !!*