The US Department of Justice has announced the prosecution of a former e-commerce executive, the first antitrust case of its kind.
Announced on Monday, the DoJ's antitrust division said a man has agreed to plead guilty to fixing the price of posters he sold online through Amazon Marketplace. David Topkins admitted to fixing the price of specific posters from early as September 2013 until approximately January 2014. Together with unnamed co-conspirators, Topkins fixed the price of posters sold in the US through the online third-party seller market.
According to papers filed in the US District Court of the Northern District of California, based in San Francisco, the group adopted "specific pricing algorithms: and coordinated changes in the pricing of posters. In addition, the sellers wrote computer code "that instructed algorithm-based software to set prices in conformity with this agreement." Prosecutors say this resulted in goods being sold at uncompetitive, collusive prices.
The charge levied against Topkins accuses the seller of violating the Sherman Act. The 1980s Sherman Act is a federal antitrust law which prevents the attempted monopoly of trade. Certain acts, such as working with rivals to fix prices, divide markets or rig bids are considered contrary to this law, and are "considered so harmful to competition that they are almost always illegal."
Those who violate this act can expect a maximum prison sentence of 10 years and individually a fine of up to $1 million. However, under federal law, the maximum fine may be increased to "twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million," according to the department.
The US Federal Trade Commission (FTC) bans "unfair methods of competition" and "unfair or deceptive acts or practices," and as the US Supreme Court has ruled violating this act also violates the FTC's ruling, antitrust cases may be investigated under either the DoJ or FTC, depending on the case.
Topkins has agreed to pay $20,000 in fines and cooperate with the DoJ's continuing investigation, but this plea still requires court approval to be accepted.
Assistant Attorney General Bill Baer of the Department of Justice's Antitrust Division commented:
"Today's announcement represents the division's first criminal prosecution against a conspiracy specifically targeting e-commerce. We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms.
American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses."
The prosecution against an online seller is the first of its kind, but as more consumers than ever turn to the Internet in order to purchase goods, it is unlikely to be the last.
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