Black Friday and competition law: compliance top tips, opportunities to grab and errors to avoid

Black Friday remains an annual hallmark event for shoppers all over the world and this year is expected to be no different. As bargain hunters ready themselves for upcoming offers, recent data from consumer intelligence group Nielson shows that sales in UK supermarkets slowed in October and early this month in anticipation of the shopping event.

But shoppers don’t actually have to wait for the official time to come on 29 November. The concept of Black Friday as a single 24-hour period is continuing to evolve as retailers increasingly run campaigns in advance of the official date, allowing shoppers to get ahead of the game and start their holiday shopping early. Nielson's Black Friday data shows that a third of customers (32%) took advantage of early promotions in 2023, and it is expected that this trend will continue to climb during 2024's festive period.

Time to shine

Many retailers, particularly online retailers, will inevitably treat this time as a prime opportunity to host a range of short-term discounts and price promotions, in the hope of boosting sales volumes across the retail sector. This year, Nielson predicted that computers and electronics, along with home and kitchen products, will be particularly "hot" purchases for seasonal shoppers.

Amid the promotion-fever and bargain hunting, brands and suppliers are understandably keen to ensure that their products remain well positioned. For some, this may involve encouraging and incentivising retailers to drive volumes during this period, while others may be more concerned about protecting their brand image and remain wary of anything that may result in their reputation for premium quality being jeopardised.

Alternatively, for a number of retailers, the focus is on the growing consumer emphasis on sustainability. Concerns around the carbon footprint associated with Black Friday are becoming more prevalent.  Some brands are, therefore, actively protesting the trend by running anti-Black Friday campaigns, launching offers and initiatives that oppose the push for large volumes of new purchases, in the hope of bolstering their sustainability credibility.

But tread carefully

However, there is the issue of competition law. As the battle for control over brand positioning and retail pricing continues to escalate, all sides should bear in mind that competition law clearly restricts the degree to which retailers are free to set retail prices.

In short, manufacturers are not allowed either to impose fixed or minimum resale prices or to limit the level of discount offered by retailers on particular products.

Retailers may be obliged to comply with qualitative criteria that exist to protect brand image, but these cannot be used to force retailers into pricing at certain levels. For the increasing number of brands who sell direct to consumers, healthy caution is needed to avoid any unlawful co-ordination of pricing and promotions with their independent reseller channel.

Online sales

Retailers must remain free at all times to sell online, with limited exceptions, and EU consumers must be able to shop online across the EU without digital barriers.

The Geo-blocking Regulation prevents retailers selling within the EU from discriminating against a customer based on their nationality, place of residence or place of establishment in the Union. Cross-border retailers in the EU must, therefore, review and evaluate their pricing policies carefully, as they will not be permitted to block or reroute consumers within the EU seeking the best Black Friday deals across different channels.

Luxury and high-tech brands operating selective distribution systems can impose minimum quality criteria on online reselling to protecting the brands' quality and luxury aura.

Additionally, some brands may also opt to apply higher supply prices for products resold online, reflecting the additional investments made in the consumer journey by bricks and mortar retailers.

Algorithms and AI

Algorithms, artificial intelligence and other digitals tools can be game-changing for monitoring reseller and competitor pricing and are becoming increasingly popular for retailers in today's technological climate.

However, the use of pricing algorithms can be problematic, as the Competition and Markets Authority highlighted in its blog post earlier this month, This is especially true at this time of year and retailers must be careful that they do not inadvertently share pricing or other competitively sensitive information through the use of algorithms or other digital tools.

Thought must also be given to ensure that the outputs from these tools are used only for legitimate purposes within the business and not as a means to identify and unlawfully penalise discounters.

Osborne Clarke comment

While this time of year is a period of flurry and opportunity, with this excitement comes an element of risk. Breaching competition law can result in severe penalties, in the worst case resulting in fines of up to 10% of worldwide turnover and personal liability in certain jurisdictions.

Brands and retailers would do well to speak to a competition law expert if they have any concerns or are seeking guidance about retail pricing (particularly in the context of online sales) both during this festive period and more generally.