Protect online retail, says eBay

Calls to regulate 'restrictive' e-commerce

eBay is undertaking a fully-fledged media campaign in Australia, securing an interview with the prestigious ABC Lateline Business programme. The online auctioneer-and-budding-mall has used the platform – and an extraordinarily soft interview – to call for Australia’s competition regulator to intervene in online retail in Australia.

eBay VP Deborah Sharkey told Lateline that it's critical for online retailers to work with government and for the Australian Competition and Consumer Commission (ACCC) to protect the future growth of the e-commerce sector.

Lateline's Ticky Fullerton offered eBay VP Deborah Sharkey a full toss with Dorothy Dix questions about whether manufacturers and retailers have a "cozy relationship" that stops some products appearing online. Sharkey responded with a raft of figures from eBay's Online Business Index.

Fullerton plucked out one aggregate for Sharkey, that "78 per cent of those surveyed said they had trouble with manufacturers and suppliers who tried to stop the sale of their products online".

Actually, this wasn't quite accurate, even from the survey data: the 78 per cent figure is a roll-up of all respondents' complaints against manufacturers or suppliers, including:

35 per cent of retailers who claimed manufacturers or suppliers had tried to prevent online product sales; 25 per cent who said they were "required" to sell at or around a recommended retail price; and 22 per cent of sellers who "suspected" that their problems with suppliers happened because suppliers didn't like them selling products online.

Perhaps the issue is more complex. Let's look again: 25 per cent of sellers said manufacturers/suppliers "occasionally" tried to restrict online sales, while 10 per cent of sellers said this took place "frequently".

This only tells the story from the retailer's point of view. It doesn’t reveal the number of manufacturers involved. That 10 per cent of retailers experiencing frequent problems may be dealing with a small number of very popular suppliers – the data doesn't reveal this.

Questions of price-fixing are far more serious. Resale price maintenance is illegal in Australia, and the ACCC has a steady stream of minor actions against companies that can't resist trying to prevent retail discounting.

However, rather than being a serious, endemic problem, it's mostly an occasional problem (19 per cent of sellers). Only 6 per cent of sellers reported encountering resale price maintenance frequently.

So when the data is unpicked, what do we find? Retailers report problems with suppliers (which is hardly unique to internet sales), an unknown number of suppliers tries to restrict online sales (the simplest technique would be, I suppose, not to enter wholesale agreements with Internet retailers – I don’t know if this is illegal), and another unknown number of suppliers tries to fix prices (which is clearly illegal in Australia).

Without hard numbers – particularly the number of suppliers involved in restrictive trade practices – it's impossible to assess whether or not eBay is creating a storm in a teacup, but that’s not how eBay sees it. From the programme transcript:

"It is absolutely critical that industry leaders partner with government, with retail players and the ACCC to ensure that continued e-commerce growth and to prevent against restricted trade practices online,” Sharkey said.

Without any detail of how prevalent illegal practices are among suppliers, it's impossible to assess how much action is needed – and, of course, if a retailer is suffering resale price maintenance, there's no need for any new mechanisms. Such problems are what the ACCC is for. ®