Regulator welcomes end of Amazon's "price parity" rule

The Office of Fair Trading (OFT) has welcomed a decision by online giant Amazon to end its price parity policy (release).

Amazon's policy had prohibited sellers on its platform from offering the same goods elsewhere at lower cost. Here's how Amazon describe it:

Price parity generally means that the price of each product you list on Amazon.co.uk is not higher than your best price for that product on any other non-physical sales channel. More specifically, it means that the total price and corresponding item price of each product you list on Amazon.co.uk are not higher than the lowest total price and corresponding item price at which you or your affiliates offer the product on any other non-physical sales channel.

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We believe that price is an important factor in customer buying decisions. Accordingly, we ask sellers who choose to sell their products on Amazon.co.uk not to charge customers higher prices on Amazon than they charge customers elsewhere. Customers trust that they'll find consistently low prices and other favourable terms on Amazon.co.uk and we think this is an important step to preserve that trust.

The retailer has scrapped the policy after the OFT launched a formal investigation into the policy in October 2012. The regulator felt that the policy resulted in higher prices for consumers.

Of course, vendors on Amazon's platform always had the option not to sell via Amazon and this will reduce the usefulness of Amazon as a portal for consumers considerably.

In practice, this may increase so-called "shoe leather costs" for consumers who don't want to spend longer trawling the web for the best deal.

With the advent of price comparison websites, these shoe leather costs have already been greatly diminished, as consumers can compare prices of the same goods from many different vendors within seconds.