Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Amazon, Apple charged with fixing online resale prices, (Jun 30, 2014)

By Linda O’Brien, J.D., LL.M.

Online retailer Amazon has conspired with electronics manufacturer Apple to fix the resale prices of electronic device accessories sold by sellers on Amazon’s website, according to a complaint filed in the federal district court in Seattle (Hard 2 Find Accessories, Inc. v. Amazon.Com, Inc., June 27, 2014).

Amazon offers programs that allow sellers to sell their products on its website and the customer’s own branded website, and to fulfill orders through Amazon, in return for a fixed fee, revenue share fee, or per-unit activity fee.

The complaint states that, in January 2012, Hard 2 Find (H2F), a seller of cellphone, camera, personal digital assistant, and GPS device accessories, entered into a services agreement to sell items through Amazon. In June 2013, H2F was informed by Amazon that Apple, Inc. filed a complaint that two items offered for sale by H2F for the Apple iPad infringed their intellectual property right and may be counterfeit. As a result of the complaint, Amazon removed the two items from its website. The complaint was based on anonymous customer feedback, and Apple did not communicate with H2F or its customers who purchased those items, or conduct a test buy of the items in order to investigate the feedback. If Apple had done so, it would have determined that the two items offered for sale by H2F were not counterfeit, according to H2F.

In June 2013, H2F was informed by Amazon that its selling privileges were removed, its listings were canceled, and a temporary hold was placed on its account because certain items offered for sale by H2F may be counterfeit. H2F appealed Amazon’s decision and contacted Apple to resolve its infringement complaint. Apple responded that the claim was lodged in error and it would withdraw its complaint with Amazon. In August 2013, Amazon informed H2F that the account was closed due to several factors not listed in its June 2013 communication: previously complaints from Apple in January, February, March, April, and May 2013 that were unknown to H2F, the complaint charges.

H2F again appealed Amazon’s decision to close its account in September 2013. Amazon has failed to respond to H2F’s appeal and has refused to reinstate H2F’s account – an act which has permanently shuttered its business. H2F’s account remains suspended and it has lost approximately $180,000 a month since the account was closed. Additionally, the agreement between H2F and Amazon required H2F to use Amazon’s payment service. Amazon failed to transmit to H2F buyer payments it received with 10 days as required by state law.

According to the complaint, Amazon and Apple engaged in a conspiracy to fix the resale prices for items sold by distributors that involved Apple monitoring Amazon’s sellers for selling items at a low price point, filing baseless infringement claims with Amazon to shutter the seller’s account, and delaying any resolution of the complaint so that Amazon would close the seller’s account. Amazon and Apple’s conduct has had an actual adverse effect on competition and has raised the prices of iPad covers for consumers.

H2F asserts claims for breach of contract, tortious interference with business/contractual expectancy, breach of covenants of good faith and fair dealing, breach of fiduciary duty, unjust enrichment, defamation, and violations of Section 1 of the Sherman Act, Washington Uniform Money Services Act, and Washington Consumer Protection Act. The action seeks damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 2:14-cv-00950.

Attorneys: Matthew Z. Crotty (Crotty & Son Law Firm, PLLC and Bradley C. Crockett (Layman Law Firm, PLLP) for Hard 2 Find Accessories, Inc.

Companies: Hard 2 Find Accessories, Inc.; Amazon.Com, Inc.; Apple, Inc.

News: Antitrust WashingtonNews