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Happy to haggle?

 

Article date:  11/02/2015

I wonder how many of us think we are getting a bargain if we buy goods and services through a broker, such as an internet site.  I mean, it makes sense doesn't it for a bulk buyer to be able to negotiate the best prices?  This is not always the case however, as many internet businesses offer a trade off with their suppliers - "you give us a cheap price, and our internet site will get you a higher volume of business".

The European Commission recently announced that a number of the competition authorities of its member states are investigating price parity clauses entered into by Booking.com.  A price parity clause is where the accommodation supplier is obliged to offer Booking.com the same or better room rates than the supplier offers elsewhere or even directly to its own customers.

If you're in business you want to be free to negotiate the best prices from your suppliers, and as a supplier you want to get the best price you can.  If a supplier has entered into a price parity clause this will not be the case.  As part of the contract review service that Higgs & Sons' commercial team offers its clients, we come across such clauses regularly.  They tend to be commonly used by big businesses who use a wide supply chain and effectively act as a guarantee that their supply chain is offering them the best prices.

It will be interesting to see if the European competition authorities involved decide that such price parity clauses are anti-competitive.  After all, shouldn't a supplier be free to offer a low price directly to his best customer if he wants to?

If you would like to talk to one of our commercial team about your supply contracts please contact Jane Rudge on 01384 327127.

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