The Office of Fair Trading (OFT) has launched an investigation into how online retailers use software and data to target individual customers with personalised prices and may use its powers to take action against such activities.
Some businesses monitor consumer behaviour online, collecting and recording information about individual shoppers' purchasing habits, websites they have visited and the items and services they have looked at, as well as the type of device or internet browser they use.
The OFT will look at how businesses use such consumer information, including whether they change the prices they offer individual shoppers as a result. It is interested to establish whether online retailers are acting outside the law with such practices.
"Innovation online is an important driver of economic growth. Our call for information forms part of our ongoing commitment to build trust in online shopping so that consumers can be confident that businesses are treating them fairly," said Clive Maxwell, OFT chief executive.
"We know that businesses use information about individual consumers for marketing purposes. This has some important potential benefits to consumers and firms. But the ways in which data is collected and used is evolving rapidly."
He added: "It is important we understand what control shoppers have over their profile and whether firms are using shoppers' profiles to charge different prices for goods or services. This call for information will help us understand these practices better and to decide whether or not this is an issue on which the OFT needs to take any action."
The OFT will be collecting information over the next six months and is interested in hearing from software providers, online retailers, and will also be consulting with the US Federal Trade Commission.
Findings from the investigation will be published in spring 2013.
The OFT also recently wrote to 62 of the top UK online retailers after it found evidence of non-compliance during a review of potential breaches of the Distance Selling Regulations.