Judge Advances EBay Antitrust Class Action

Friday, January 06, 2012 

SAN FRANCISCO (CN) - A federal judge refused to dismiss most of a class action that claims eBay monopolized the market for payment systems used in online auctions.
     The auction site allegedly raised fees and shut out payment-system competitors after acquiring PayPal in 2002.
     The class claimed eBay has made PayPal the only viable option for sellers, and therefore sellers have to pay fees to eBay both for listing and selling their products and for using PayPal.
     EBay's accepted payment policy prohibits sellers from asking buyers to contact them for additional payment methods or from asking buyers to use a method a seller did not include in their listing, according to the class. If it believes a seller violates the policy, eBay removes seller's listings.
     EBay claimed that the statute of limitations barred accusations by lead plaintiff Charlotte Smith and a class of others who sell products on eBay.
     If the court found that the clock began when eBay acquired PayPal in 2002, it would have expired in 2006 under the four-year statute of limitations for private antitrust claims.
     U.S. District Judge James White disagreed in an unpublished decision Thursday that the class tied its claims of attempted and actual monopolization to eBay's acquisition of PayPal.
     The class instead tied the claims to the continued modification of eBay's accepted payment policy. This included prohibiting payments through Google Checkout in 2006; doubling PayPal Buyer Protection in 2007, which allegedly eliminated buyer protection for non-PayPal transactions; requiring sellers to accept electronic payments in 2008.
     Since the changes allegedly "inflicted new and accumulating harm" on the class, eBay enforced an alleged tying agreement within the limitations periods.
     The sellers also argued that there is little motivation for other online-payment systems to enter the market since sellers can accept payment only via PayPal, and those that do are foreclosed from offering their services directly to the class at a lower, market-driven cost.
     White said, however, that these "conclusory allegations are not supported by facts alleged elsewhere" in the first amended complaint
     He nevertheless gave the class leave to amend allegations that the alleged tying between eBay and PayPal caused harm to competitors.
     The class alleges that the relevant market is online auctions and that the tied product is online payment services. White said the relevant market might be sustainable, rejecting eBay's claim that the market is "impermissibly narrow."
     Noting that the class identified specific fees at issue, White also rejected eBay's motion to toss antitrust injury claims, opining that the arguments are better addressed by summary-judgment motions.
     The class also has leave to amend claims that eBay improperly collects a shipping fee when buyers and sellers actually handle shipping and related fees. White dismissed the claims Thursday, saying the class did not show lack of consent to pay eBay a "final value fee," of which the shipping charges are a part.