E-tailers complain of bullying, anti-competitive behaviour from traditional retail rivals. Report: Jane Lindhe

The Australian Competition and Consumer Commision is scrutinizing bricks and mortar retailers amid claims that they are bullying suppliers into avoiding online retail competitors.

Online retailers claim that some large bricks and mortar retailers use their muscle to engage in anti-competitive practices such as arranging license agreements that prevent manufacturers supplying to online retailers, pressuring third parties not to deal with e-tailers and insisting on minimum resale prices as a condition of supply.

ACCC chairman Rod Sims has reiterated that the regulator is closely examining how traditional retailers are dealing with their suppliers and the impact it is having on competition. He says bricks and mortar retailer must understand that, "online technology is revolutionizing competitive dynamics".

"We will do all we can to prevent incumbents misusing their market power against the many new competitors that will emerge," Sims said earlier this year.

"The digital economy can provide lower prices, innovative business models and other potential benefits, including immediacy, convenience and a wider range of choice. Our aim is to make sure those benefits are maximised."

The National Australia Bank online retail sales index found that consumers spent $11.1 billion online in the year to the end of April - 15.5 per cent more than the previous year. The traditional retail sector achieved 4.1 per cent.

But the ACCC's threats are having little impact on the behaviour of traditional retailers. Kogan founder and managing director Ruslan Kogan says.

In his experience, initial discussions with the sales agent of major electronics companies are positive, only to fall through at the eleventh hour because of the bullying tactics of the large, traditional retailers.

"Everything will go smoothly then when it comes to the crunch, they will stop responding to emails. They say 'Let's meet for coffee to discuss this', then tell you in person that senior management has stopped the deal because you're online and the tradition retailers don't like it," Kogan says.

"This practice is hard to prove [to the ACCC] because suppliers know not to put any of their reasoning in an email. They don't want to go on the record."

Kogan stocks mainly its own branded products but recently began selling a limited range of products from international brands such as Apple Samsung, Sony, Canon and Nikon. It has found dealing directly with Asia, often the head office of the electronics companies, much easier than dealing with the Australian arm of businesses.

"Asia is a free market and they will deal with you,: Kogan says. "Australia is a very close market."

Bricks and mortar retailers potentially are breaking tha law with this behaviour, says competition law with specialist and partner at Truman Hoyle ACCC will be "a willing ear" for complaints against anti- competitive behaviour in the future.

"Entrenched retailers can't be allowed to illegally stomp over the competitive rights of their online rivals," says Edghill.

"After the moment there is a lingering odour over the state of competition. Someone will have to clear the air."

Edghill says that besides reminding traditional retailers an suppliers of the obligations under the Competition and Consumer Act, international online retailers need to be aware that even though they are based overseas selling into Australia also makes them liable.

Last year a case brought by the regulator saw ticketing agency Ticketek for taking advantage of its market power to deter or prevent a newly established online competitor.

The case, according to the ACCC's Sims, highlights the risk for established business attempting to stop or obstruct an online competition.

But e-tailers such as Kogan are not holding their breath for the ACCC to further action.

While Kogan's staff are infuriated by the practice and ask for their complaint about anti-competitive behaviour taken to be taken or the ACCC, Kogan says that would have little impact.

"I tell my staff that 'dobbing is not our style. Instead we will wait until the market adjust itself," he says. "The ACCC can't really do anything. But these suppliers cannot afford to ignore online forever, not if they want to increase the volumes and grow."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.