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Washington - Manufacturers, eBay And Its Sellers In Dispute Over False Accusations To Curb Retail Discount

Published on: May 20, 2009 09:30 AM
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Washington - An eBay Inc. executive told a U.S. Senate hearing Tuesday that some manufacturers of consumer products are falsely accusing eBay merchants of selling counterfeit merchandise in an effort to restrict retail discounting.

The testimony, in a hearing before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, came as the committee is considering a bill that would bar minimum pricing agreements between manufacturers and retailers. Such pacts were regarded as illegal price fixing for decades until a 2007 Supreme Court decision opened the way for them and ruled they weren’t automatically illegal if consumer benefits could be shown.

EBay, an Internet auction site, and several small Web retailers have said the agreements have multiplied since the 2007 court ruling, curbing their ability to offer discounts. Manufacturers and some big retailers “like the Internet when it is closed and structured to serve their interests but they are threatened by the Internet when it is harnessed to offer consumers better deals,” Tod Cohen, eBay’s deputy general counsel, told the hearing.

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In written testimony, Mr. Cohen said that Captive Works Inc., a Los Angeles electronics maker, claimed in February 2008 that flash drives and other computer accessories being offered by one eBay dealer were counterfeit. The items were removed from the site.

After the dealer insisted the goods were authentic, eBay investigated and concurred, Mr. Cohen said in an interview. “When the seller asked CaptiveWorks why it was claiming that his listings were replicas when they were in fact authentic, the company made it clear that it targeted his lists because they were being sold at a lower price,” Mr. Cohen testified.

Calls to Captive Works on Tuesday weren’t returned.

Stacy John Haigney, attorney for discount retailer Burlington Coat Factory Inc., argued that the Supreme Court ruling makes it nearly impossible for a retailer, especially smaller ones, to challenge a manufacturer’s minimum pricing policy. He called for legislative relief.

“A company would have to hire 10 economists and hire a team of lawyers to be able to offer the volume of evidence that competition was harmed,” an expense that would be beyond the means of many companies, he said.

In defense of the high-court ruling, James A. Wilson, the chairman of the antitrust section of the American Bar Association, testified that any legislative action negating the Supreme Court decision, “would eliminate the ability of courts to weigh” the benefits versus the anticompetitive effects of a pricing agreement.

The bill, introduced by Sen. Herb Kohl (D., Wisc.), has the backing of the attorneys general of 35 states.



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Read Comments (7)  —  Post Yours »

1

 May 20, 2009 at 09:06 AM Anonymous Says:

I sell on ebay and everything that I do sell is all legite. I don't have any over head to pay for I place my order & I get what I sell and I take of everything that is involved. a store has over head. lights water employees racks and shelves rent all this has to be added in to their cost all I add in is a dollor for my costs so my prices are much lower then what u would find in a store.also ebay has made some great changes for the better I hope b/c of these big stores crying ebay won't change for the worse.

2

 May 20, 2009 at 09:26 AM ebay seller Says:

can somebody offer some analysis of this issue ? presumably if consumers are over charged for there toothpaste due to MAP pricing they can easily change brands to one that is cheaper. And if the consumer is so amazed by one companies chocolate cake that he cant switch to another brand , than what right does the government have to dictate the price it should be sold for.

3

 May 20, 2009 at 09:27 AM former Ebay platnuim power seller Says:

Over the years ebay has changed for the worse,i guess you havent been selling on ebay for a long time

4

 May 20, 2009 at 11:13 AM Funny Says:

Reply to #3  
former Ebay platnuim power seller Says:

Over the years ebay has changed for the worse,i guess you havent been selling on ebay for a long time

I guess you haven't sold on ebay for a long time!!!. B"H My business is doing great on ebay, but Amazon is a different story.

5

 May 20, 2009 at 11:30 AM Anonymous Says:

#2, the typical example would be a brand name that is recognized, such as selling an Ebel watch. I think the argument that government shouldn't get involved in this kind of thing is rather out the door, as it is already involved in many such things. The MAP actually forces this grey market as legitimate dealers dump stuff at discount prices to Ebay-type sellers because the manufacturer forces them to buy too many goods or threatens them with cutting off supply if they don't.

6

 May 20, 2009 at 10:18 AM PMO Says:

Reply to #2  
ebay seller Says:

can somebody offer some analysis of this issue ? presumably if consumers are over charged for there toothpaste due to MAP pricing they can easily change brands to one that is cheaper. And if the consumer is so amazed by one companies chocolate cake that he cant switch to another brand , than what right does the government have to dictate the price it should be sold for.

In a free market people should be able to sell an item for any amount they see fit. "Price-Fixing" as it is called is when a producer says that you can't sell their merchandise for less than a certain amount. The government is not trying to say how much can be charged, they are trying to say that someone can charge any amount they want. It is based on protecting free-market Capitalism which I am a big supporter of, however any law that tells a business what they can and cannot do is suspect to me. I would prefer that market conditions led to the end of this practice as opposed to the government stepping in.

7

 May 21, 2009 at 03:54 AM Bugsy Siegel Says:

It is true that manufacturers claim that items are fake on Amazon too. I was selling an authentic item and Amazon contacted me saying the item was fake. I responded that the item was authentic and offered to send a sample to Amazon. That was the end of that.
A friend of mine was selling stuff on ebay and all of the sudden they shut him down and all other sellers selling the same item. Probably, the company claimed the item was fake.

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