Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Sept 4 2016 12:12:04

Pacts with Competitors Land Online Sellers in Hot Water

By: Ina Steiner

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Be warned - what may seem like reasonable business agreements between two or more online sellers can be considered illegal by regulators and law enforcement. 

We've seen this with a group of rival sellers of art posters who, according to the FBI, coordinated the prices of their products, which it called price-fixing and compared it to the type of conduct that occurs in "smoke-filled rooms." In that case, sellers faced felony charges.

Now regulators are cracking down on sellers who enter into agreements not to compete with each other in paid search.

The FTC sued 1-800 Contacts and charged in its complaint: "The major online search engine companies, Google and Bing, sell advertising space on their search engine results pages through computerized auctions. Beginning in 2004, 1-800 Contacts secured agreements with at least fourteen competing online sellers of contact lenses providing that the parties would not bid against one another in certain search advertising auctions."

The FTC alleged: "These bidding agreements unreasonably restrain both price competition in search advertising auctions and the availability of truthful, non-misleading advertising. The Bidding Agreements individually and in combination constitute an unfair method of competition and violate Section 5 of the Federal Trade Commission Act, 15 U.S.C. - 45."

The government alleged that the agreements stemmed from lawsuits that 1-800 Contacts brought or threatened against numerous rivals, which accused rivals of infringing its trademarks. "In almost all cases, 1-800 Contacts' rivals agreed to sign the anticompetitive agreements to cease bidding." But, regulators said, "The complaint alleges that the bidding agreements are overly broad and not necessary to safeguard any legitimate trademark interest."

Why should the FTC care about agreements among online merchants? The agency wrote, "The bidding agreements harm consumers, according to the complaint, by restraining competition for, and distorting the prices of, advertising in relevant online auctions, by reducing the number of relevant, useful, truthful and non-misleading advertisements, by restraining competition among online sellers of contact lenses, and in some cases, by resulting in consumers paying higher retail prices for contact lenses."

Both cases are based on concerns that consumers may be paying more due to anti-competitive activity. 

So beware of entering into agreements with rivals - particularly if those agreements are designed to maintain higher prices for consumers.




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Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: sellerchick This user has validated their user name.

Sun Sep 4 13:06:03 2016

Trust. No. One.  

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: pace306 This user has validated their user name.

Sun Sep 4 17:35:20 2016

'Cause 1-800 Contacts aren't UPS and Fed ex who coordinates prices, or audio manufacturers who force MAP and institute UPP on sellers.....

They also aren't smaller sellers who are forced to sign "no eBay/ no Amazon", right????

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

This user has validated their user name. by: Rexford

Mon Sep 5 05:03:12 2016

It is quite odd how many stories you see of sellers in hot water, but you never see companies like Amazon or eBay in hot water, at least not in the USA.  I hold on to the thought that every dog has his day.

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: maxmad This user has validated their user name.

Mon Sep 5 07:06:02 2016

@ sellerchick, pace306, Rexford

So true,,,,

these agencies go after easy picking's they seem to overlook the real BIG criminals who steal money from consumers by the Trillions, I could easily select 10 companies who do more harm to consumers and the environment in one day, then all of these business's

What a wacky world we live in.  

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: pace306 This user has validated their user name.

Mon Sep 5 09:56:35 2016

... mad :) (happy labor day) ... Id be happy if they just went after eBay ......

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: mcposty This user has validated their user name.

Mon Sep 5 20:53:53 2016

Its sickening the they go after small fries and let big companies do as they please, united states are hypocrits and evil

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: johnjm22 This user has validated their user name.

Mon Sep 5 22:35:18 2016

It's a good thing we have the FBI to go after people who are selling posters.

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: rover This user has validated their user name.

Tue Sep 6 05:38:45 2016

Small dealers in the UK have long got together to fix prices for bidding at auctions. Its known as ''the ring'' and almost impossible t prove. A group of sellers who deal in similar products and who know one another well will make an informal agreement not to bid against one another in a public auction. They elect one or two people to bid on behalf of the group. Then later they meet in a hotel room or similar and divide out the lots amicably between them. Legally it is impossible to prove that a dealer who did not physically place a bid had deliberately refrained from doing so. Dealers can come up with all kinds of reasons why they did not place a bid. However with the growth of online bidding such agreements between groups of dealers are by no means as effective as they once were in keeping prices low.

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

This user has validated their user name. by: Angel Warrior
Web Site

Tue Sep 6 06:37:10 2016

We live in a ridiculous world where logic has no place...

We live in an era of arrogant RUDENESS.

Perminate Link for Pacts with Competitors Land Online Sellers in Hot Water   Pacts with Competitors Land Online Sellers in Hot Water

by: Flying Childers This user has validated their user name.

Tue Sep 6 09:17:46 2016

How about the big Pharma drug companies that are price fixing life saving drugs and cancer cures?  We are talking about a matter of life and death- look at the Epi Pens- yet the Feds and FBI are going after Ebay sellers??

One of the 10 Biggest Lies:  I'm from the Government and I want to help you.

Screw them.



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