|Sun Oct 16 2011 23:50:55|
Did Justice Dept Err in Allowing eBay Acquisition of PayPal?
By: Ina Steiner
In 2002, the Justice Department green-lighted eBay's acquisition of PayPal. By allowing the transaction to sail through, it signaled its belief that there were no antitrust issues with the deal.
Fast forward 9 years and you'll find eBay has been engaged in a campaign to get buyers and sellers to use PayPal exclusively to conduct transactions on its marketplace. Its new shopping cart is the latest move to push eBay shoppers into using its own PayPal service to pay for purchases.
Did the Justice Department fail to anticipate how eBay would wield its power to get its merchants to use the online payment service?
When eBay announced plans to acquire PayPal in 2002, the U.S. Department of Justice had 30 days to evaluate the acquisition and, according to rules set out by the Hart-Scott-Rodino Act, determine whether it would investigate further. Despite the fact that PayPal itself had complained to the DOJ about alleged anti-competitive practices at eBay, and to the surprise of many observers, the DOJ let the waiting period expire.
Here's what's happened since then:
eBay launched a policy in which it would only protect buyers who paid for their purchases with PayPal.
All new sellers are required to offer PayPal (or a merchant credit card) as a payment option.
eBay moved to an online-payments only platform - "Checks, money orders, and bank wire transfers aren't allowed for most eBay purchase," according to this eBay help page.
While requiring eBay users to use only electronic payments, it excluded domestic competitors such as Google Checkout and Amazon Payments and only allowed payment services with little visibility in the U.S. (the UK's Moneybookers and Australia's Paymate) of for larger sellers (ProPay).
eBay required all sellers in certain countries such as UK to accept PayPal on all listings.
eBay attempted to make its Australian marketplace PayPal only and ban all other forms of payment - until the Australian government stepped in and squashed the plan.
And now, eBay's latest PayPal push on the marketplace platform: its new shopping cart works only with listings in which PayPal is offered exclusively. Listings that accept another payment method - even if they also accept PayPal - are excluded from the shopping cart feature.
We asked eBay if there was any timeline on when the shopping cart would work with other payment methods, and a spokesperson said there was no timeline that she knew of at this time.
By excluding other payment services from its shopping cart, eBay once again favors its own payment service ahead of competitors. Consumers can shop elsewhere - though many of eBay's competitors accept PayPal too - but eBay sellers have little choice but to follow the marketplace's rules.