EBay, others want end to retail price-fixing

A Supreme Court decision is hurting Internet business and consumers, critics say

A two-year-old court decision allowing manufacturers to set the minimum prices that retailers can charge for their products is driving up prices U.S. buyers pay for a range of products and hurting Internet sellers, three witnesses told a U.S. Senate subcommittee Tuesday.

Congress should pass a law effectively overturning a 2007 decision by the U.S. Supreme Court saying that so-called vertical price-fixing isn't necessarily a violation of U.S. antitrust law, representatives of eBay, Burlington Coat Factory and the U.S. Federal Trade Commission said.

That Supreme Court decision, in Leegin Creative Leather Products v. PSKS, hurts small and medium-size Internet sellers trying to compete with established retailers, said Tod Cohen, eBay's vice president and deputy general counsel for government relations. The court's decision went against 96 years of antitrust law, he said.

Retail pricing agreements "guarantee that consumers will pay higher prices" on a wide variety of products, added Pamela Jones Harbour, a member of the FTC. "Consumers usually do not realize they pay substantial retail-price management [RPM] premiums."

Old-line manufacturers and retailers are threatened by the Internet, where innovative small companies are using technology to drive down prices, Cohen said. But with the Leegin decision, many manufacturers are hunting down online retailers selling below set prices and cutting off their supplies, Cohen said.

"There is evidence that small and midsized Internet retailers are the primary target of aggressive RPM policies," Cohen said. "Many eBay sellers have been targeted by manufacturers and large retail partners with various tactics to take down their listings and discredit their sales."

Cohen called on Congress to pass the Discount Pricing Consumer Protection Act, introduced in January by Senator Herb Kohl, a Wisconsin Democrat and former president of the Kohl's retail chain. The bill would outlaw vertical price-fixing in U.S. antitrust law.

But vertical price-fixing may have some benefits, and courts should not view such agreements as automatic antitrust violations without considering these benefits, said James Wilson, a partner in the Vorys, Sater, Seymour and Pease law firm and chairman of the American Bar Association's antitrust law section.

Manufacturer RPM policies can allow main-street retailers to compete with big-box discount chains by setting the price both types of stores can charge, Wilson said. A longtime rule against vertical price-fixing "has had the effect of enhancing the market power of very large-scale retailers that carry a wide variety of products," he said. "It has harmed smaller retailers who try to compete with those large retailers not on price ... but on the basis of quality and service."

The legislation may not have a huge impact, Wilson added, because manufacturers could still choose which retailers they do business with. Manufacturers can set prices by avoiding discount retailers, he said.

But Kohl and other senators said they've seen evidence of vertical price-fixing on products such as electronics and toys, even as many U.S. families have less money to spend. "For a lot of my constituents, every penny counts," said Senator Amy Klobuchar, a Minnesota Democrat. "Prices to the American consumers have indeed been elevated."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags ebayonline auctionsonline shopping

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Bitdefender 2019

This Holiday Season, protect yourself and your loved ones with the best. Buy now for Holiday Savings!

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?