Wednesday, May 20, 2009

EBay Backs Vertical Price-Fixing Ban

Internet auction giant eBay has emerged on the front lines of a congressional movement to restore a century-old ban on vertical price-fixing that was overturned by the Supreme Court in 2007. The company's vice president, Tod Cohen, testified before a Senate Judiciary Antitrust Subcommittee hearing Tuesday in favor of legislation that its chairman, Sen. Herb Kohl, D-Wis., has advanced to reinstate a regime that was overturned by the high court's split decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc. "Retail price-fixing, as allowed for in the Supreme Court's Leegin decision, is anti-competitive, and hurts small businesses and consumers," Cohen said, noting that citizen benefit from of an open Internet and open competition. He testified at a similar House Judiciary Courts and Competition Policy Subcommittee hearing last month.

"Because of the Leegin decision, large manufacturers and their biggest retail partners are able to use price-fixing to curtail Internet and small business based competition. These established players are threatened by innovative online businesses, such as eBay sellers, that offer consumers better prices, more options and new services," he said in a statement. "During difficult economic times, consumers should not be denied the choice and value that robust small business competition provides." Cohen said that his Web site has experienced a surge in takedown requests since the court's ruling, with one firm called Net Enforcers making more than 1.2 million complaints about low-price listings. FTC Commissioner Pamela Jones Harbour and an executive from Burlington Coat Factory also testified in support of Kohl's bill, which the American Bar Association and the National Association of Manufacturers oppose.

Read CongressDaily's hearing coverage here.