FTC Urged To Investigate eBay TCGPlayer Deceptive & Anti-Competitive Conduct In ROCC Petition
UPDATE 8-1-24
I have submitted the following public comment for today's FTC Open Meeting in support of the Responsible Online Commerce Coalition's petition to investigate eBay/TCGplayer for Anticompetitive Mergers, Deceptive Practices & Unfair Methods of Competition.
If Lina Khan and others high up at the FTC want to prove they are not unduly influenced by their personal histories with eBay founder Pierre Omidyar, taking up this petition and adding a thorough review of eBay's ad practices (in line with their investigations of Amazon) would be a good place to start.
Amanda Lewis, Co-Founder of the Responsible Online Commerce Coalition, has filed a petition with the Federal Trade Commission calling for an investigation into eBay's acquisition of collectible trading card marketplace TCGplayer for alleged violations of the FTC Act and federal antitrust law.
The petition on behalf of ROCC member DJ Johnson and other 3rd party sellers cites “serious concerns about eBay/TCGplayer’s apparently deceptive and anticompetitive conduct” including illegal monopoly maintenance, anticompetitive rollups, and overcharging sellers and consumers through unfair and deceptive “junk fees.”
infotheroccoalition.com
This group of sellers had written to eBay CEO Jamie Iannone, TCGPlayer CEO Rob Bigler and eBay's Board of Directors with their concerns earlier this year, but as the petition shows, eBay VP Legal Aaron Johnson's response denied all allegations and declined to further address any of the issues the letter raised.
The petition claims eBay/TCGplayer has consolidated the online trading card game market through both horizontal and vertical acquisitions of ChannelFireball and BinderPOS, which has allowed them to eliminate competitors and make key industry tools exclusive to its own marketplace.
Last month's acquisition of Goldin Auctions was also cited another example of eBay using M&A to eliminate competition in the online auction market for sports trading cards and memorabilia.
The sellers say TCGPlayer shut down 50+ accounts for using 3rd party tools to synch inventory across platforms and that this "exclusionary conduct" forces sellers to use TCGplayer exclusively, erecting insurmountable barriers to entry for any would-be competitors.
They also allege selling fees are unfair and deceptive; doubling, tripling, quadrupling, or more on pass-through charges to extract additional profits using the “Cart Optimizer” feature as well as overcharging for PayPal/Credit Card Fees and shipping.
The petition goes on to call out eBay's anti-competitive and deceptive practice of competing with 3rd party sellers on its own site under the TCGPlayer name without adequate disclosure that TCGPlayer is owned by eBay, citing Value Added Resource's investigation into the practice published last month.
Liz Morton
In addition to the quote from VP Seller Experience Xiaodi Zhang mentioned above, CEO Jamie Iannone repeated the claim that eBay does not compete with its sellers as recently as April 2024.
Iannone made the statement in an interview with seller, Linda Lightman for his ongoing LinkedIn video series “The Accidental Entrepreneur: Lessons in Success.”
When Linda praised eBay for taking feedback from sellers, Jamie said "I always like to say we don't compete with our sellers at eBay. We're only successful if our sellers are successful."
The letter also raised concerns about eBay TCGPlayer's treatment of employees, particularly authentication workers who voted to form eBay's first US union last year, and the company's ongoing delays in bargaining and union-busting activities which resulted in new Unfair Labor Practice charges being filed with the National Labor Relations Board just last week.
Liz Morton
TCGUnion-CWA had been hopeful that negotiations would begin to move forward more productively after eBay reinstated previously removed commitment to bargain in good faith in company's Human Rights Policy and agreed to a settlement that included compensation for previously fired pro-union workers and other concessions in return for dropping several prior NLRB complaints in March.
But new Head Of Labor Relations, Kristi Selby, appears to be putting the union-avoidance and delaying tactics ostensibly learned in her decade plus stint at Nestle to good use by continuing to draw out the bargaining process.
The company has also engaged infamous anti-union law firm Littler Mendelson to represent their interests since labor trouble began brewing shortly after eBay acquired TCGPlayer in October 2022 in a ~$295 Million deal that initially left founding CEO Chedy Hampson and other key management in place, despite a history of strained labor relations which led to a previous unsuccessful union drive in March 2020.
Those previous union efforts and ongoing labor issues raised questions about due diligence and disclosure in the TCGPlayer acquisition and what the impact could be for eBay's other labor centric operations, leading Hampson and eBay Chief Accounting Officer Brian Doerger to both step down from their positions on March 20th, 2023.
Liz Morton
In addition to these ongoing labor issues, a historic $59 Million settlement with the DEA and litigation brought by the EPA, eBay recently entered into a deferred prosecution agreement with the Department of Justice after being criminally charged in connection to the 2019 cyberstalking of journalists Ina and David Steiner of EcommerceBytes.
The deal hit the company with the maximum fine of $3 Million dollars and will require enhanced compliance monitoring for 3 years, including a specific focus on Mergers and Acquisitions due diligence, disclosure and risk management.
Liz Morton
The broad scope of the compliance monitoring suggests the Department of Justice and other Federal regulatory bodies may be concerned about a wide variety of business practices, opening eBay's entire operation up to additional scrutiny that the FTC may want to consider along with this petition.
Liz Morton
Interestingly, Chief Legal Officer Marie Oh Huber announced in March that she will be stepping down after almost 9 years at the company to pursue "a new chapter in her career, while exploring personal interests and passions."
Both Oh Huber and Aaron Johnson participated in some troubling email exchanges that were revealed in the cyberstalking case as then CEO Devin Wenig, Chief Communications Officer Steve Wymer and Security Director Jim Baugh discussed how to handle the perceived "problem" of the Steiners coverage and Fidomaster/unsuckEBAY, an anonymous Twitter user who was a frequent EcommerceBytes commenter and source which sparked the ire of top executives at the company.
The email chain started with Wenig expressing his desire to see the unsuckEBAY Twitter account shut down - assigning the task to Baugh, with Oh Huber and Wymer copied.
Wymer responded, confirming he had previously discussed the issue with Baugh and explored all angles with Twitter but had been unable to get the account killed.
Oh Huber echoed the frustration, but her and Aaron Johnson both advised there wasn't a strong claim to appeal to Twitter to take action.
Baugh said his team had been investigating for weeks and were close to discovering the identity and location of unsuckEBAY.
Oh Huber accepted that answer with a smiley face emoji, saying she would hold off on pursuing further legal steps in light of Baugh's investigation.
Wymer then added more fuel to the fire by making it very clear how utterly vexed by the situation he was, saying any effort to "solve" the problem should be explored...Whatever. It. Takes.
While neither Oh Huber nor Johnson were named in either the criminal or civil cases regarding the cyberstalking scandal, it's very interesting that his name also comes up in this petition to the FTC, signing the official response eBay sent to this group of sellers regarding their concerns and allegations about anti-competitive practices.
But he's not the only current eBay VP with connections to both the cyberstalking case and the TCGPlayer acquisition.
Molly Finn, who was Chief Compliance Officer at the time the cyberstalking occurred, was copied on several related emails as well, according to redacted privilege logs included in court filings.
Finn's job title was changed to VP Deputy General Counsel M&A and Securities in December 2021, a position which she still holds today and which put her directly in charge of overseeing the TCGPlayer acquisition process in 2022.
eBay's 2024 Proxy Statement published in April also revealed changes to company compliance and ethics programs as part of their annual report that are likely directly related to the cyberstalking enhanced compliance monitoring requirement and concerns about due diligence, disclosure and compliance in the TCGPlayer acquisition.
Liz Morton
Also, in the ongoing EPA case against eBay for the sales of prohibited pesticides, restricted chemicals, and illegal emissions-control cheat devices on the platform, eBay has been attempting to argue that it is "never itself a seller" and is instead "a pure third-party, peer-to-peer online marketplace" - both of which are demonstrably false in light of TCGPlayer's sales on the platform.
If eBay loses that case, they could be subject to fines up to an estimated ~$2 Billion, not to mention potential shareholder lawsuits, making this TCGPlayer development a particularly risky course of action.
The FTC petition concludes by saying the potentially anticompetitive mergers, anticompetitive conduct, unfair and deceptive practices, and unfair methods of competition are harmful to TCGplayer sellers as well as consumers and estimates eBay/TCGplayer’s overcharge scheme alone could represent about $20 million annually that would likely be passed through to consumers if it was eliminated.
Neither eBay nor TCGPlayer have responded to requests for comment at time of publishing.
Read the full petition urging the FTC to investigate eBay/TCGplayer here:
