The argument for and against price fixing on eBay

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Many eBay sellers are familiar with the dreaded VeRO notice or other communication from a manufacturer demanding that they remove legitimate product from eBay or simply refuse to continue supplying their products to the merchant. Ongoing cases include L’Oreal who in France won a court order banning four brands entirely from eBay along with a €38m fine.

The argument put forward and upheld in a US court decision is that specialist retailers provide additional services to enable the consumer to make an informed decision which simply isn’t provided by Internet merchants. By allowing the same products to be sold online undercutting high street retailers, consumers can purchase at the best possible price having researched the product at a traditional retailer.

Retailers simply can’t afford to provide highly knowledgeable staff to assist consumers with their choices simply to lose the sale when the buyer goes online to make their purchase. In the Leegin Decision (.pdf document), the US courts decided that this would be the end of high-end retailers and decided that minimum price fixing across retail stores and the Internet wouldn’t break price fixing (or as it’s know in the US antitrust) legislation.

I’ve yet to see any hard evidence to support this theory and frankly it sounds like a great excuse made up by retailers wanting to control distribution of their product and shun a free market.

eBay testified at the US congress petitioning against the court ruling and issued a statement saying “Threatened by the surge of online competition, mega-retailers have unleashed teams of lawyers and lobbyists and used price fixing as a tool to squash competitors

Very simply many of these cases are simply about protecting uncompetitive commercial practices at the expense of consumer choice. In the US not all the Supreme Court Justices agreed with the ruling and one went so far as to say “The only safe predictions to make about today’s [The Leegin] decision are that it will likely raise the price of goods at retail”.

It’s good to see eBay petitioning against such rulings. Each time a retailer wins a verdict to allow price fixing or restrict the availability of their products on eBay or on the Internet in general the only losers are online merchants and the consumer.

Have you had a manufacturer restrict your ability to sell online? If so let us know in comments below. If you’ve had a restriction overturned it would be great to hear how you persuaded the manufacturer to allow the sale of their products online (or how you evaded any potential restrictions).

14 Responses

  1. I have had many warnings and have had listings cancelled I even had a uk listing cancelled as the distributor in poland complained to ebay. It just seem so unfair that I can’t sell the product that I have bought at what ever price I want. Surely the first r in rrp is Recommended.

  2. we have just had a supplier contact us re putting up our prices for ordinary home and garden products they sell them online to and are unhappy we sell for less.

    they state we need to be authorised to sell them, and we are not yet we have email correspondence stating they knew we were selling on the web and the sites we were selling on, so our solicitors have advised us that by suppling goods to us knowing full well the sites we were selling on, they have authorised us, otherwise why supply them to us for 2 years, knowing where we were selling them and never mentioning authorisation.

    This is blatant price fixing and is illegal.

    Whilst I understand say certain high brand perfumes etc… may want to PROTECT the brand, protecting the price of a step stool!!!!!!!!!!!!!!!!!!!

  3. At the end of the day, if eBay had a “good” image, no-one would mind that their products were being sold on there.

  4. re 3

    this supplier has said this re ebay, amazon, ebid, and other sites.

    So has nothing to do with Ebay beening seen as a cheaper site they just want to fix the price!!!

  5. I agree with #3 to some extent. I remember something to do with Tesco and designer jeans that was stopped in a similar type of thing, it may have been CK or someone, I can’t remember. It isn’t just happening on the web.

  6. In the past Zippo had my listings removed from eBay. My supplier had given me a copy of their invoice that Zippo had sent them for the goods. Proving that they were authentic. The reason I could sell them at less than RRP was because they were designs that Zippo had dropped. Zippo and eBay ignored this and I had no choice but to stop selling them. VeRO is there to stop fakes being sold not to stop people selling last years designs at a knock down price.

  7. We had a supplier find out and stop selling to us. This is in the designer clothing world where they take it very seriously. They threatened to sue us. In this case, my boss had signed a contract stating he would not sell online.

    Price fixing for these kinds of goods is not all bad. It is just economics–If they don’t price fix, the items aren’t worth as much (because designer items are necessarily conspicuous consumption.) And we’re talking about price fixing designer clothing, not milk.

    That said? Good luck to the retailers. If there is money to be made, we’ll make it!

  8. “Retailers simply can’t afford to provide highly knowledgeable staff to assist consumers”

    If L’Oreal and the rest of the cosmetic Co’s would stop putting those scary looking women on their counters their sales would probably rocket!!!

  9. We’ve had to sign contracts with some suppliers saying we won’t sell their items on eBay (no problem selling on Amazon). And quite a lot of potential new suppliers we’ve spoken to this year have made it quite clear they wouldn’t supply us if we were to sell their items on eBay.

    I totally understand where they are coming from. Sellers pop up on eBay, trash the market for 6 months, then disappear because they didn’t realise they were making no money once fees and VAT were taken into account. And all the while, we have to compete or sell nothing.

    These suppliers are simply protecting their brands, and their current loyal stockists.

  10. have had listings removed when selling (real) lipsy clothing.

    also had a David Beckham canvas removed because umbro complained that it was breaking their copyright! (the picture showed him wearing an england strip, which is made by umbro) ridiculous. luckily we have a few shops, so we just put them into a shop instead.

    bloody VeRO.

  11. What seems odd to me is that selling on Amazon doesn’t seem to be an issue for the suppliers that don’t want us to sell on eBay.



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