eBay Seeks Reversal of Price-Setting Rule

Company says the 2-year-old Supreme Court decision is anti-competitive.

by Auctiva.com staff writer
- May 21, 2009

eBay is urging a Senate Judiciary Subcommittee to reverse a 2-year-old Supreme Court decision, saying the ruling is unfair to consumers and prevents competition among sellers.

The verdict, known as the Leegin decision, allows manufacturers to set a minimum price that sellers cannot go below when they sell items online or off. However, many groups, including eBay, say the ruling hurts consumers' rights since it doesn't allow buyers to determine the fair-market value of goods.

"Retail price-fixing, as allowed for in the Supreme Court's Leegin decision, is anti-competitive, and is hurting small businesses and consumers," notes Tod Cohen, the president and deputy general counsel for Government Relations at eBay.

Small and mid-sized Internet retailers suffer, "as the decision empowers traditional businesses to curtail the efforts of small sellers to offer lower prices," eBay notes.

And some manufacturers have begun to scour sites, including eBay, for merchants who sell items below the set minimum price, and cut off their supply of goods, Cohen tells the subcommittee. Some manufacturers even use automated tools to search through listings, according to reports.

"Many eBay sellers have been targeted," Cohen says.

As a result, Cohen is urging Congress to enact the Discount Pricing Consumer Protection Act, which would prohibit price minimums. Some states have similar laws in place. And recently, Maryland became the first state to enact a law that specifically prohibits the Leegin decision.

"[Maryland is] the first state to take a swing at the Leegin decision," says attorney Christopher S. Finnerty.

The Federal Trade Commission is also looking at the Leegin decision and might bring anti-trust actions against it and other price-setting agreements. That's because such agreements just guarantee buyers will pay higher prices for the items they purchase and prevent competition, says Pamela Jones Harbour, a member of the Federal Trade Commission.

During difficult economic times, price-setting agreements can be especially hard on merchants and buyers, alike, Cohen adds.

"Consumers should not be denied the choice and value that robust small business competition provides," he notes.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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