EBay Pressures Senate To Outlaw Minimum Pricing

Bill would overturn SCOTUS price-fixing decision

Get the WebProNews Newsletter:

[ Life]

eBay, Burlington Coat Factory, and the US Federal Trade Commission are pressuring the US Senate to pass a law banning vertical price-fixing, effectively overturning a 2007 Supreme Court decision.

Manufacturers and retailers actually call it vertical “retail price management” (RPM). The practice entails setting a minimum price retailers can sell specific items for. Remember last Christmas, when you spent hours online comparative shopping only to find out everybody who carried it was selling it for exactly the same price?
Sale, Same as Everyone Else
That was likely because of RPM, which for the previous 95 years had been considered illegal under antitrust law. The Supreme Court didn’t actually declare RPM legal in its 5-4 landmark decision, but the court did say it wasn’t always illegal. Though the ruling made way for antitrust claims to be considered on a case-by-case basis, it also made way for big retailers to collude with manufactures to drive prices up while disincentivizing purchasing from smaller, perhaps lesser-known retailers.

For example, while Store A and Store B have offer the same required minimum price on a certain toaster during a busy shopping period, Store B is much bigger and has the means to add incentives to buying from them that Store A can’t match. This could come in the form of additional services, freebies, discounts on other items, or discount partnerships with other major players.

Proponents of RPMs argue minimum pricing sometimes actually boosts competition, a viewpoint SCOTUS obviously agreed with in 2007. But eBay, Burlington, and the FTC are arguing that not only does minimum pricing hurt competition, it is also anti-consumer because the result is artificial price inflation—a guarantee the customer always pays too much and has no competition to turn to for remedy.

eBay goes as far as to say manufacturers and retailers use RPM to ramrod smaller players.

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

Herbert Kohl
Herbert Kohl

Senator Herbert Kohl (D-WI) has taken up the cause, introducing the Discount Pricing Consumer Protection Act, which is to serve as an amendment to the Sherman Antitrust Act. To that act, the legislation adds this sentence:

“Any contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler, or distributor shall violate this Act.”

The bill currently has been referred to the Senate Judiciary Committee for review.


EBay Pressures Senate To Outlaw Minimum Pricing
Top Rated White Papers and Resources
  • http://nymarts.com NYM Arts

    What NEEDS to happen is the Senate should be FORCING Ebay to adhere to the Sherman Act that GUARANTEES us the right to collect Checks and Money Orders.
    Not to Enforce this Basic Law is a Direct Slap in the face to our Brave Men and Women.
    All else is completely irrelevant.

    • Guest

      Really? Are you kidding? Ebay only bars those forms of payment because the fraud with bogus ones is UNBELIEVABLY RAMPANT. If you want to collect those forms of payment, sell on Craig’s List. Interesting that you equate protecting their seller from fraud equals slapping the military to you. There are many other forms of payment you can decide to use, and that a good section of the ebay buyer’s have moved to long ago. Side questions: (1) are you still on dial-up?, (2) do you run at less than 1024 resolution?, (3) vote Democrat regularly?

  • SportsBilly

    If an employee has the same salary or hourly rate daily, I think the employeer has the right to also get some kind of steady income, with this proposal this will be achieved, somehow. I understand that bargain lovers will not see it like that but how can you expect to buy under cost and then still, wonder why you are losing your job. I have a business and there is always someone selling under cost, usually 1) a bunch of people going out of business, 2) people who don’t know what they are doing 3) people who get stolen goods. If this law happens to apply but there is some kind of discount that can be applied ( or free shipping ) it will be something not that bad at all. Like I said, we all love good deals, but that my friend, will cost something to someone, my question is, would you care about who gets affected there or you care more about saving a penny?

  • Online Retailer

    Consumers go online to pay less. If brick and mortars actually still offered customer service they’d find consumers are willing to pay a premium for it. Instead they hire uninterested teens/twenty somethings that don’t know the product. They then cry the manufacture about how they can’t compete with the online retailers?!?! eCommerce is not going away, it’s time for these lazy retailers to earn their 50% margins or close up shop.

  • Join for Access to Our Exclusive Web Tools
  • Sign Up For The Free Newsletter