Distribution, Competition, and Antitrust / IP Law

eBay and PayPal Can’t Cut Tying Claims

photo credit: Wikipedia

In Smith v. eBay Corp., No. C 10-03825 JSW (N.D. Cal. May 29, 2012) (White, J.), the court refused to dismiss tying claims against eBay and PayPal where the plaintiffs alleged that eBay had tied national on-line auction services to the national on-line payment services provided by PayPal.

Distinguishing the Ninth Circuit’s recent cable TV channel tying case, Brantley v. Universal, Inc. 675 F.3d 1193 (9th Cir. 2012), which I covered here, the court noted that plaintiffs had alleged that defendants’ tying of auction services to on-line payment services had denied alternative payment systems such as Google Checkout access to the largest online marketplace (eBay).  Plaintiffs thus alleged, in essence, that they had been precluded from offering Google Checkout as an alternative to PayPal.  “It is reasonable to assume from these allegations that the alleged tying arrangement caused consumers of on-line auction services to forego substitutes for PayPal.”

The plaintiffs in Brantleywere tripped up because they didn’t allege (and apparently couldn’t allege) that independent TV networks had been foreclosed by the tying/bundling practices at issue in that case.  The competitor foreclosure allegations in Smith v. eBay, while thin, were apparently enough to avoid a similar result.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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