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FBI Says Amazon Sellers Used Algorithm in Price-Fixing Scheme

The US Justice Department’s Antitrust division lauded the result of its ecommerce investigation into price fixing on Amazon Marketplace. The agency alleges that online seller David Topkins and other co-conspirators fixed pricing on certain posters sold through the Marketplace over a period of time from September 2013 through January 2014.

Topkins, along with Jonathan Garriss and Adam Hersh, was a principal of Gotham City Online and employee of Art.com at that time. Topkins and Garriss were also cofounders of an eBay seller association called PESA. The three business partners had sold Gotham City Online’s poster business (Poster Revolution) to Art.com in 2012.

“Today’s announcement represents the division’s first criminal prosecution against a conspiracy specifically targeting ecommerce,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms.”

Topkins faced a felony charge filed in US District Court in San Francisco and is now cooperating with authorities as part of a plea deal that will result in a $20,000 fine, according to the FBI. Under terms of the Sherman Act, price fixing could earn a violator jail time of up to ten years along with potential fines up to $1 million.

Investigators allege conspirators manipulated pricing for certain posters sold in the US via Amazon Marketplace. “To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement,” the Justice Dept. said in its statement.

This isn’t the last of the price fixing case the ecommerce industry is likely to see. Federal investigators ended up on the trail of the poster price fixing problem as an offshoot of a separate investigation. The Justice Dept. described that probe as “an ongoing federal antitrust investigation into price fixing in the online wall decor industry.”

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.