Power Sellers Unite

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

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?

http://blog.auctionbytes.com/cgi-bin/blog/blog.pl

luckyalive · Joined: 27 Apr 2008 Posts: 589

Although the Justice Dept. green lighted it, ultimately its up to each state to decide if they want paypal and ebay operating in their borders. These do not have a inherit right to operate in each state. I am curious how effective an petition with signatures handed over to a local congressmen would have if the content specifically said that if you do not pass new laws regulating ebay and paypal in the state we will be voting against you in the next election. My local auctioneers have no where near the controlling power of these two companies - ebay is an auctioneer. Many of my local auctioneers use software to manage their auctions - so are they now not auctioneers.

armourereric · Joined: 25 Aug 2008 Posts: 129

It was always my understanding that Justice made as part of the terms for aquisition a prohibition against ebay ever requiring Paypal as a condition of using ebay, but after the fact, the Bush admin directed justice not to enforce the provision.

Stockmiser · Joined: 03 Jun 2006 Posts: 1169

armourereric wrote (View Post): › docWrite("quote")It was always my understanding that Justice made as part of the terms for aquisition a prohibition against ebay ever requiring Paypal as a condition of using ebay, but after the fact, the Bush admin directed justice not to enforce the provision.

There's a specific law that allows the DOJ to investigate large mergers for potential anti-trust violations. Nothing was found, so there were no provisions or directives.

Last year the same issue was raised in the anti-trust case, and the federal court dismissed the case for several reasons - a big one being that they didn't find ebay/paypal to be a monopoly, so anti-trust laws did not apply.

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

"ebay/paypal to be a monopoly"

Stockmiser, do the actions of ebay REQUIRING sellers to use their own paypal online payment service mean they are NOT attempting to force their own sellers into using their own online payment company?
This to me might seem a monopoly via not allowing the ebay sellers to use googelcheckout or whomever.
After all, ebay makes a bit less $ if their sellers use an alternative payment system. Paypal has been the money maker for ebay for a while now.
Just asking.....

Stockmiser · Joined: 03 Jun 2006 Posts: 1169

The legal question isn't whether or not ebay is forcing it's sellers to use it's own payment service - there is nothing illegal about that in the US.

You could start your own online store tomorrow and require that everyone pay using your own payment service. You are not required to accept competitive services, like VISA or paypal, and you aren't even required to accept cash.

When terms like "anti-competitive" are thrown around in the context of anti-trust it really means that the company has so much power or market share in a particular market segment that they are able to stifle competition in that marketplace. This eliminates competitors and allows the company to control prices, which is not good for the consumer. That's basically the philosophy of anti-trust.

So the rules of competition are, in fact, different for a "monopoly". Through anti-trust laws, the government has the power to limit expansion of the monopoly, and can even break up a company that has too much control.

But for regular companies - even huge billion dollar companies - in a competitive market, fierce competition works best for the consumer. Just look at the cellphone market.

So the real issue is determining if ebay has monopoly power over a market segment, and that depends a lot on how you define "market segment". The Ebay/Paypal anti-trust suit thrown out of federal court last year was based exactly on this issue. The court did not accept that "online auctions" was a defined market segment. They just saw auctions as a business model for online merchandising. Further, they didn't even see ebay as an online merchant - they saw them as an online service provider.

So since ebay has no monopoly power in either market segment - there seems to be plenty of competition and ebay is actually losing market share - there is no reason ebay isn't free to require paypal to the exclusion of competitors. Amazon doesn't take paypal directly and it doesn't seem to be preventing them from competing.

As I understand it, the only reason why the paypal requirement was a problem in some other countries, like Australia, was because they have specific laws about separating financial institutions and merchants.

tomgar · Joined: 08 Sep 2011 Posts: 7

THE ABOVE PERSON IS WRONG. IT IS DEFINITELY ILLEGAL FOR A PUBLICLY TRADED COMPANY TO FORCE ITS BUYERS AND SELLERS TO USE THE SERVICES OF A COMPANY IT OWNS AND NOT ALLOW THE SELLERS THE OPTION OF STATING THEY WILL ACCEPTS CHECKS, MONEY ORDERS, ETC. IT IS ALSO ILLEGAL FOR EBAY TO LIMIT THE VOLUME THE SELLER IS ALLOWED TO SELL. THIS IS A RESTRAINT OF TRADE. YOU MUST KEEP IN MIND THE EBAY IS A PUBLIC COMPANY AND THE STOCKHOLDERS ARE THE PEOPLE THAT SHOULD REBEL. FORTUNATELY, EBAY IS NOT THE 'ONLY GAME IN TOWN'.

GARY
TOMGAR CORPORATION
TOMGAR.NET

Stockmiser · Joined: 03 Jun 2006 Posts: 1169

"Restraint of trade" would be if ebay said that anybody selling on ebay was required to accept paypal only - even for non-ebay business.

"Restraint of trade" would be if ebay said that anyone selling on ebay is not allowed to sell on other sites, like Amazon.

But for business conducted on it's own service, they can impose their own requirements.

So it's also "illegal" for Amazon not to accept money orders or take paypal?

What does that fact that it's a publicly traded company have to do with it? Their only obligation is to do what makes money. Stockholders of ebay also are stockholders of paypal - from a stock point of view it's the same company.

What law says that ebay must take other forms of payment even if it means they would make less money or take more risk?

tomgar · Joined: 08 Sep 2011 Posts: 7

YOU HAVE MISSED THE POINT. EBAY REQUIRES EVERYONE TO ACCEPT PAYPAL AND THE SELLER MUST HAVE THAT OPTION IN THEIR LISTING. EBAY SAYS THE SELLER IS NOT ALLOWED TO STATE IN THE LISTING THAT IT ALSO ACCEPTS CHECKS, MO, ETC. THESE TYPES OF POLICIES OF A PUBLICLY TRADED COMPANY ARE ILLEGAL. A PRIVATE COMPANY CAN SET WHATEVER POLICY IT WANTS, BUT EBAY IS NOT A PRIVATE COMPANY. I HAVE NOTIFIED EBAY'S LEGAL STAFF, THE SEC, THE FTC, AND EBAY LETTING THEM KNOW THE ERRORS OF THEIR WAYS. IT HAS FALLEN ON DEAF EARS. WELCOME TO EBAY AND AMERICA, WHERE WE ARE FREE TO DO AS WERE TOLD.

GARY
TOMGAR CORP