EBay urges rethink on EU's Internet sales plan

BRUSSELS Thu Feb 18, 2010 8:39am EST

BRUSSELS Feb 18 (Reuters) - Ebay Inc (EBAY.O) urged European regulators to drop a requirement for Internet retailers to have "bricks-and-mortar" shops, warning it would hurt small firms, keep prices high and stifle e-commerce.

According to a draft regulation drawn up by the European Commission and seen by Reuters, suppliers may be allowed to require that distributors have a "brick-and-mortar" shop before they can sell online. The proposed rules would replace existing guidelines exempting companies from strict EU competition rules under certain circumstances. Those rules expire at the end of May.

A "brick-and-mortar" provision would hold back e-commerce growth in Europe over the next decade just when it is at a "teenage stage", Tod Cohen, eBay's vice president, told reporters. "The direction of the general text is very positive towards online commerce. (But) this brick-and-mortar provision is inconsistent with this," he said, saying the requirement would benefit large retail players at the expense of small players.

"Those who want to engage in price discrimination will have another tool to do it," said Cohen, who is lobbying the Commission to drop the proposed rule changes.

Brand owners - often in the high-end or luxury segment - say the provision is necessary to stop so-called free riders, competitors who benefit from promotions carried out by brand name companies, shifting stock online on the back of advertising of a brand's products and services.

Because "free riders" do not have to pay for the costs of a shop and related overheads, they can frequently offer brand-name products over the Internet at discounted prices.

"The purpose of a brick-and-mortar shop provision is to help retailers invest in luxury shops," said Antoine Winkler, a partner at law firm Cleary Gottlieb Steen & Hamilton who represents several brand name companies.

Cohen's criticism echoed that of Amazon (AMZN.O), the world's largest online retailer.

The brick-and-mortar rule would reduce competition and limit consumers' choice, Amazon Europe's retail vice president, Greg Greeley, wrote in the Wall Street Journal earlier this month.

(Editing by Luke Baker)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
PhilipCohen wrote:
I can understand eBay lobbying against this “brick-and-mortar” provision, but it has nothing to be with looking after small on-line retailers; it’s all about looking after eBay.

eBay (aka “the eBafia”) is demonstrably a totally unscrupulous criminal organization!

How could that be, you ask? Well, with much effort and some multi-auction analysis, it can be very clearly demonstrated (see the following link) that shill bidding fraud by unscrupulous professional sellers on nominal-start auctions, is rampant on eBay auctions, and the executives “in the know” at eBay, unless they are actually even more naive than they apparently think all we simple consumers are, cannot but be aware of that criminal activity.

And, if they claim to be not so aware, then I am making them aware of it here and now. And, of course they will say they are not aware, because they do not want to be aware, because if they admit that they are aware of such criminal activity (which they cannot but be, and from which they are profiting), and they do nothing effective about it (which they don’t), then they are guilty of the crime of “criminal facilitation”. It’s as simple as that!

And, it can also be demonstrated that, contrary to their claims, they do not do anything proactive nor truly effective to prevent such criminal activity. Indeed, they have done the very opposite, during the second half of 2008 eBay introduced anonymous non-unique masking of bidding IDs, which serves no logical purpose other than to deliberately further obscure such criminal activity and aid and abet said criminal shill-bidding sellers to maximize their sale prices, thus maximizing eBay’s final valuation fee (FVF).

It’s even worse in the UK, where the form of bidder masking makes it simply impossible for buyers to detect the unscrupulous, sophisticated shill-bidding professional sellers that undoubtedly now infest eBay UK auctions. Needless to say sales by auction on the UK site have collapsed to a small fraction of what they used to be.

Is it any wonder then that, relatively speaking, buyers are staying away, and eBay’s marketplace business, the world over, is still going down the toilet?

Then, don’t ever forget that to have any chance of understanding anything that eBay says you have to reverse the meaning of what they say a random number of times; only then might you have a still less than 50% chance of knowing what they actually mean by what they have said.

From a buyer’s point of view, the full ugly story of eBay, and the proof of eBay’s criminality, at
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6502877

It is about time that some competent authority in the US shone a really bright light under this slimy rock.

Then there is PayPal—about the only part of the eBay business that is not, relatively speaking, going backwards.

PayPal offers a banking-type service, a service that would be more appropriately and competently carried out under the auspices of the banking community via their credit card company partners.

The simple fact is that without the bankers’ knowledge of the entities involved in the transactions, PayPal, or any other provider, will always be handicapped.

The head turkey at eBay, “Noise” Donahoe, has occasionally talked of the possibility of offloading PayPal because he is just barely smart enough to know that when the major credit card companies do get off their butts and introduce a like card/terminal-less payments system to complement their credit card system, they will do it properly, and the “clunky” PayPal will then sink like a stone—other than, possibly, on what is by then left of the Donahoe-ever-shrinking eBay marketplace.

If this turkey has any brain at all he will be actively trying to sell PayPal to the banks to complement their credit card system; but I doubt the banks would want to lower their image any further by associating themselves with the likes of PayPal; not even for a peppercorn consideration would the banks touch such an incompetent amateur operation as PayPal, I suspect.

But, does anyone think that “all the banks” are not watching this market segment with interest, and is it possible that it could well be having a negative effect on their credit card business? Why would “the banks” not be considering a like system to complement their card systems? After all, every internet banking user is already set up to receive such a service directly, efficiently and securely, from their bank. The simple fact is that anything that PayPal can do “the banks” can do better.

Do we then need to offer the banks and the major credit card companies another such monopoly-type situation? Ideally not. But, having said that, within the credit card system the individual banks do compete with each other on interest rates, etc.

Regardless, it would be nice to have a card/terminal-less system that worked effectively—as does the banks’ credit card system. Regrettably (or thankfully, some would say), PayPal does not have such a partnership with “all the banks” and so PayPal (nor the other providers) can never offer that same effectiveness.

My only surprise is that “all the banks”, via their credit card partners, have not yet announced their own system. When they do, it will be bye, bye, PayPal—you most ugly of children. And, more importantly, we will then have a system that works effectively, just like our credit cards do!

In support of the above comment I offer an introduction to an introduction to the full sad/ugly story at
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6503466

And, if you want a laugh or a cry (whatever moves you), take a look at this recent video interview of this arrogant, clumsy, inarticulate, flip-flopping, buffoon, Donahoe (the hand language tells it all) at
http://www.youtube.com/watch?v=kgmBYHOvb8Q&feature=player_embedded

How this clown ever got to be CEO of a listed public company is incomprehensible to me (hang on, she who would be governor of California selected him). Donahoe is undoubtedly going to go down in US corporate history as the man who literally did “kill the golden goose”.

Feb 18, 2010 4:46pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.