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Price personalisation or price discrimination: Can your computer tell the difference

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Price personalisation or price discrimination: Can your computer tell the difference

Reece May, Senior Associate in the Competition Law practice joined Jeremy Maggs on Hot 1027 to discuss Price personalisation or price discrimination: Can your computer tell the difference?

14 Aug 2024 Radio interview
Price personalisation or price discrimination: Can your computer tell the difference

Price personalisation or price discrimination: Can your computer tell the difference

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Price personalisation or price discrimination: Can your computer tell the difference

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Reece explained that, in its simplest form, price personalisation is when large firms with substantial capital and advanced IT capabilities analyse the data profile of every customer purchasing from their website. By assessing this data, they determine each customer's willingness to pay and charge different prices for the same goods or services based on this perceived willingness.

He noted that the algorithm for price personalisation considers several key factors, such as geography, purchase history on the website, and search history. For instance, if a customer frequently searches for high-end or luxury brands, this could alter their perceived willingness to pay. While price personalisation is predominantly seen at the retail level, it is likely to extend to the wholesale markets as well.

Regarding legal implications, Reece clarified that the Competition Act does not outright prohibit personalised pricing strategies. However, there may be specific instances where such practices may violate the Act, especially if the price personalisation amounts to price discrimination in respect of wholesale customers. Price discrimination involves charging different prices for the same product, and for it to contravene the Act, it must negatively impact competition or hinder HDPs (Historically Disadvantaged Persons) or SMMEs (Small, Medium and Micro Enterprises) from participating in a market.

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