Dual pricing scandal forces up web prices

Web shoppers are facing a pre-Christmas price hike on many electronic goods

Millions of internet shoppers face a "rip-off" Christmas after a decision by leading electronics companies to force up the online prices of many goods, according to a report in The Times.

The Interactive Media in Retail Group (IMRG), which represents online sellers, said that manufacturers, including Sony, are charging shopping websites wholesale prices between 10 and 15 per cent higher than for high street stores.

IMRG claims that this dual-pricing policy, which is perfectly legal, will make it impossible for online retailers to offer better prices than bricks-and-mortar stores. The group has asked the Office of Fair Trading to investigate.

James Roper, a spokesman for IMRG, said: "There is a bigger issue here about what the internet has brought to consumers [in terms of] choice, balance and better prices. This is being completely taken away."

Roper confirmed that IMRG is considering naming and shaming more of the suppliers which it claims are operating in this way.

Sony denies penalising internet shopping sites, arguing that it is rewarding stores that can demonstrate its products. In essence it runs a pricing policy which it believes takes into account the benefits provided, and the extra costs incurred, by high street retailers.

Sony said in a statement: "We supply retailers using a comprehensive set of commercial conditions that reward all dealers that add value to the brand proposition and purchasing experience.

"Commercial conditions recognise different consumer experiences and service that retailers offer to their customers."

Sony claimed that these terms were set in April 2001 to include sales transactions on the internet.

Writing in response, online retailer Benjamin Cohen, founder of cyberbritain.com, said: "This policy will hurt online retailers by making them less competitive and will damage the growth of the e-commerce sector.

"The sector is only now beginning to show signs of recovering from the dotcom crash of 2000, helped by increased broadband reach and increased consumer confidence."

But Cohen believes that he has found a cunning way around the new pricing strategy. "Net retailers should open up one high street store, then they can conform to Sony's and other manufacturers' wishes to have their products displayed and their brand promoted," he explained.

"They could locate this one shop anywhere, and they would not need to worry about making any sales there. It will surely be a way around the unfair pricing practices."