Newsletter-21

148 NEWSLETTER 2016 household appliances, computer games, software, media, healthcare, cosmetics, etc., in order to conduct its inquiry and form its Report. Price Transparency In light of this inquiry, the preliminary findings of the Commis- sion conclude that online price transparency is the feature that most affects players and customers. Price transparency has multiple effects, both negatively and positively. It is said to directly affect behaviors of customers. Customers could, in short time, compare products and their prices online, and move from one channel to another, which would help the customer to avail him/herself of the best deal; therefore, this aspect works advantageously for the customer. However, this could also give rise to free-riding. Free-Riding It is highlighted in the Report that free-riding is a major concern to both retailers and manufacturers. Consumers tend to switch be- tween online and brick and mortar shops after benefiting from their differing services. A customer may compare prices online and find the best deal without facing the burden to search prices and then purchase the product from a brick and mortar shop. These types of behaviors have led manufacturers and retailers to grant exclusivity and to create selective distribution systems. Price Competition Price competition that is created by the ease of comparing prices have had negative effects on competition in terms of quality, brand and innovation, besides its benefit to customers. Quality and brand are very important features in terms of inter-brand competition, and are a key concern for manufacturers. Price transparency is also closely monitored by the companies. It is concluded in the Report that most of the retailers track online prices, and two-thirds of them do so through a software program. Retailers use these prices to adjust their own prices according to their competi- tors’ prices.