Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Collectible authentication company allegedly colludes to reject competing dealer’s memorabilia, (Jul 16, 2015)

By Linda O’Brien, J.D., LL.M.

An authentication service for autographs and memorabilia has conspired with other authentication services and dealers to drive certain competitors from the market by labeling those competitors’ collectibles as inauthentic thereby rendering them worthless, according to a complaint filed by an autographed memorabilia dealer in the federal district court in Los Angeles (Deedle. v. Collectors Universe, Inc., July 14, 2015).

Collectors Universe, Inc. is the largest provider of authentication and grading services to collectors, retail buyers and sellers of high value collectibles. Nelson Deedle, a leading dealer in autographed memorabilia throughout the United States, operates individually and through his company, Iconographs, Inc.

The complaint states that the autographed memorabilia industry is a two billion dollar industry consisting of approximately 30 major dealers and seven auction houses engaged in the buying and selling of autographed items signed by entertainment, sports, and political celebrities. When dealers acquire items for resale, they must issue their own certificate of authenticity (COA), certifying that the item is authentic. The value of an item is based on its authenticity and items branded unauthentic are basically worthless. Therefore, to ensure the value of items that they are purchasing or selling, dealers, collectors, and auction houses use third-party authentication services for a second opinion on the authenticity of an item.

There are currently two firms that dominate the third-party authentication market—Collectors Universe, Inc. (PSA/DNA) and James Spence Authentication LLC (JSA). PSA/DNA and JSA, along with R&R Auction Company and music authenticator Roger Epperson, have a network of influence to discourage competition and use their market power to influence public perception of the authentication of items that are sold in the market. Although PSA/DNA are purportedly competitors, the companies share the same authentication staff, share information regarding the autographed memorabilia market, and collaborate on the authentication of items, according to the complaint.

The complaint also alleges that, instead of judging the authenticity of an item based on the signature and the item itself, the defendants use their market power to quash competitors’ abilities to do business in the industry, such as Deedle’s business. Since 2010, PSA/DNA and JSA have begun to fail all of Deedle’s items, not based on the authenticity of the items themselves but on the fact that Deedle sells the items. Moreover, Epperson has used his autograph magazine to suggest that all of Deedle’s items are forgeries while at the same time providing authentication services to PSA/DNA.

The defendants have formed a conspiracy to restrain trade in the autographed memorabilia market to enhance their own positions in the market as authenticators and dealers and to drive out legitimate competition. As a result of this conspiracy, Deedle has lost clients, been unable to sell his items, lost substantial income, and been precluded from business growth that otherwise would have been achieved, the complaint states.

The plaintiff asserts claims for tortious interference with prospective economic advantage, unfair business practices, and restraint of trade in violation of Section 1 of the Sherman Act and California’s Unfair Competition Law. The action seeks treble and exemplary damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:15-cv-05288.

Attorneys: Matthew M. Clarke, Dugan P. Kelley, and Matthew N. Mong (Christman, Kelley & Clarke, PC) for Nelson Deedle and Iconographs, Inc.

Companies: Iconographs, Inc.; Collectors Universe, Inc.; James Spence Authentication LLC; R&R Auction Company, LLC

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