ACCC reacted on monopolistic policy of eBay

eBay’s monopolistic goals to enforce PayPal service on Australian customers as the only payment option to be used on the auction seem to be postponed and will probably be interdicted.

Earlier this year eBay submitted an application to the Australian Competition and Consumer Commission (ACCC) to get an exemption from the Trade Practices Act in April as part of its plans to stop customers using payments methods such as direct bank deposits, cheques and money orders, on its online auction site.

Thursday, June 12 2008 ACCC released a preliminary draft decision to annihilate the notification lodged by eBay, amid "anti-competitive effect" of the proposal.

In an attempt to stop the move of the online auction house from obtruding the rule change, which was expected to take effect from next Tuesday a number of persons took part. Submissions to prevent anti-competitive actions were lodged by The Australian Bankers Association and The Reserve Bank. Besides, more than 650 submissions were sent to the ACCC by eBay users opposed to the plan.

"The ACCC is concerned that the notified conduct will allow eBay to use its market power in the supply of online marketplaces to substantially lessen competition in the market in which PayPal operates," says ACCC chairman Graeme Samuel. "If the notified conduct is allowed to go ahead, there will be no competition for the supply of such services to buyers and sellers using eBay."

According to Samuel the ACCC acknowledges that having PayPal as the only payment provider may offer some benefits to users, such as better buyer protection insurance but says this small advantage is outweighed by the increased costs to users and reduced innovation the move would generate.

“The ACCC believes that consumers are in the best position to decide which payment method is most suitable for them. The notified conduct denies them that choice,” Samuel says. “Accordingly, the ACCC considers that these benefits do not outweigh the anti-competitive effects of the conduct."

As for eBay their officials state that the online auction company is at present time evaluating the ACCC draft notice and will make a further statement once it has completed that process.

The ACCC requested eBay to delay implementation of the plan until the ACCC makes a final decision.
Meantime further submissions in response to the draft decision of the ACCC may be lodged by eBay or others to the competition watchdog until 3 July before it issues a final decree which is likely to appear several weeks after that date.