Price Parity Clauses on Internet Platform Markets

Master's Thesis from the year 2014 in the subject Economics - Other, grade: 1,7, University of Marburg (Wirtschaftspolitik), course: Masterarbeit, language: English, abstract: Recent years have witnessed a remarkable increase in internet platform markets which have become the preferred venue of interaction amongst a growing number of buyers and sellers. The ability of the internet to enable sellers reach a greater number of consumers shows that there is a high potential for growth of the internet market, with effects on competition. Following a 2013 report by the German Antitrust Authority “Bundeskartellamt” on “Vertical Restraints on the Internet Economy”, it is clear that the internet significantly reduces transaction costs and thus increases competition to the benefit of consumers. The increase in competition among sellers, producers and retailers has led to an adoption of different forms of vertical restrictions on internet platforms which have come under the scrutiny of antitrust authorities. This thesis aims to analyze vertical restraints on internet platform markets based on the investigation of Amazon.com, Inc. by the “Bundeskartellamt” for its use of a price parity clause. This clause was introduced in Germany and in the United Kingdom in 2010 in the contract between Amazon and sellers using its platform and prohibited them from setting lower prices on other platforms, including their own websites, than the prices they set on Amazon.