I am on eBay’s Side on This One

eBay fighting back on anti-competitive practices by luxury brand manufacturers

There has been a lot to criticize eBay for lately, but this time I am firmly on their side.

A few days ago I reported on the big news out of France that eBay lost a civil action by the French Courts to fine eBay 40 million Euros (About $60 million) and prevent eBay from allowing sellers to list products from the Louis Vuitton Moet Hennesy (LVMH) company on eBay.

Some the brands owned by LVMH include Dior, Louis Vuitton, Guerlain, Perfumes Givenchy, Celine, Fendi, Emillio Pucci and TAG Hueur watches.  I am not clear from the news reports if all of these products are covered but it appears that they may be. 

LVMH alleges that eBay doesn’t do enough to prevent counterfeit goods carrying their brands and based on this they were able to get  a French court to rule in such a way that eBay will have to block sellers like you and me from listing these products on eBay. And, the ban extends to used products –not just new.

So there you are sitting in Pittsburgh looking at that nice little Fendi bag you bought a few years ago when you were in Europe.  You have only used it a few times. You have kept it in the dust cover and it looks fine.  But now you really want to sell it. You still have the receipt from the Duty Free Store at Charles De Gaul Airport.  But sorry, some court in France (where eBay operates) says you can’t.

eBay has been fighting this battle for a while.  LVMH is not the first company to sue eBay. They recently lost a similar decision to Hermes and there is a lawsuit ongoing by Tiffany’s here in the US.

Although eBay does do a lot to prevent counterfeits (as they should), there is no practical way that eBay can be 100% sure something is counterfeit without having you send them the bag and the receipt and then eBay physically check the bag and the serial number. Can you imagine how much this would cost?  Well I can tell you. There is a competitive auction site called Potero at http://www.portero.com. If you want to sell on Potero, you ship the item to them, they inspect it and then list it.  Think eBay fees are high? Potero charges 30% for this service.  But they are doing pretty well because buyers know they can trust the site.

The whole designer goods market is a mess. Unfortunately there are so many counterfeits that buyers are reluctant to pay top dollar because of the risk. Karen and I used to sell designer goods a few years ago, but as the fakes proliferated prices fell on the real stuff too. Prices dropped so low that we couldn’t make any money so we quit trying.  (I still have one Fendi Messenger Style Purse if anyone is interested).

So on one hand I would favor any reasonable effort to clean the fakes off the site, but I am also against the manufacturers engaging in what are essentially anti-competitive practices. If I acquire a legitimate product from Tiffany’s or Coach or Fendi, why should that manufacturer be able to tell me what to do with it? I could give it to a charity thrift shop, take it to a local consignment store or even take out a classified ad to sell it, but I can’t sell it on eBay. That doesn’t make sense.

eBay is fighting this issue and I am strongly on their side on this one. The problem with them losing this particular court fight isn’t the $60 million –it is the precedent that sets as other courts are likely to follow.  And the manufacturers are not innocent either. If you missed it, check out my blog post about the real story behind most of the fake handbags. http://blog.skipmcgrath.com/public/item/201773

eBay reacted to the court decision with a statement by David Pride, Vice President of Trust & Safety. Here is what Dave had to say about the decision:

"We want you, our customers, to understand how much we do behind the scenes to stop counterfeits from ever making their way onto our sites (see eBay Against Counterfeits and eBay VeRO for more information). We’ve invested millions of dollars into combating the problem of counterfeits. In 2007 alone, across all eBay sites around the world, we removed over 2 million potentially counterfeit listings, and we suspended over 50,000 sellers whom we believed may have been attempting to sell fake goods.

In fact, our efforts to remove counterfeits from our site – often before anyone is able to see them, let alone buy them – are recognized by 18,000 manufacturers whom we successfully work with to combat counterfeiters.

While recognizing the importance of fighting counterfeits, we do not agree with overly broad attempts to protect uncompetitive commercial practices of authentic items at the expense of consumer choice. This threatens the livelihood of our law-abiding sellers and the ability of our buyers to get great deals. Overzealous implementation of restrictive sales practices are anti-competitive and give you, our buyers and sellers, a bad deal. This is recognized by European Union policy-makers who are seeking to create a better framework for online sales to promote e-commerce in Europe.

For sellers: Be certain that your item is authentic
Sellers who list items that are popular targets for counterfeiters must be certain that their items are authentic. Sellers should not purchase from unknown distributors and should beware of prices too good to be true, or of suspiciously large volumes of available items.

Also, please know eBay has a variety of safeguards in place to protect the marketplace from counterfeits, and occasionally good sellers with legitimate items will be slowed down by these restrictions. We recognize this can be inconvenient for some sellers, and we appreciate your continued support in this very important matter.

eBay will continue to fight against counterfeits, but we will not accept outdated attempts to restrict unfairly the Internet to the detriment of our Community. We will continue to fight for consumer value through e-commerce, and we will be appealing the ruling in France."

So we will have to see how this all plays out in the courts. We can’t really control what the courts do, but we do have influence with our elected officials.  Before you go to the polls this year, email your congressperson and ask how they stand on Internet Freedom. 

My congressman is Rick Larsen whom I have voted for in the past, but I will not be voting for again as he has gone over to the dark side and favors taxing online sellers and other issues that limit our internet freedom.

See Also

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