Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Effort to stabilize prices trips up rug accessory maker, (Oct 27, 2015)

By Jeffrey May, J.D.

The perils of inviting a competitor to fix prices were highlighted in an action announced by the FTC today against a company that sells rug accessories designed to keep rugs from curling at the corners. Step N Grip, LLC has agreed to settle allegations that it invited its closest competitor to fix prices (In the Matter of Step N Grip, LLC, FTC File No. 151 0181).

Under the terms of a proposed FTC consent order, Step N Grip has agreed to refrain from communicating with its competitors about prices. The company also would be prohibited from entering into, participating in, inviting, or soliciting an agreement with any competitor to divide markets, to allocate customers, or to fix prices; and from urging any competitor to raise, fix, or maintain its price or rate levels, or limit or reduce service. The order will remain in effect for 20 years.

Step N Grip and its unnamed competitor sold their products primarily through Amazon.com. According to the FTC complaint, Step N Grip sent an e-mail to its competitor after a series of competing price cuts. The competitor purportedly dropped its price from $16.99 per package to $13.49 in an effort to compete more aggressively with Step N Grip. Then, Step N Grip lowered its price to $12.95. After the competitor lowered its price to $11.95, Step N Grip allegedly sent the e-mail, stating: “We both sell at $12.95? Or, $11.95?” The competitor reported the communication to the FTC. The FTC alleged that the invitation to collude was an unfair method of competition (UMC) in violation of Section 5 of the FTC Act.

UMC statement. In announcing the action, the FTC reaffirmed that invitation-to-collude cases fall within the agency's stand-alone Section 5 authority. The agency briefly discussed the application of its recent Unfair Methods of Competition Statement of Enforcement Principles to invitations to collude, in its analysis to aid public comment. The Commission noted that invitations to collude have long been held to violate Section 5 of the FTC Act, and that this is unaltered by the statement on stand-alone Section 5 enforcement. Further, the Commission reiterated that potential violations are evaluated under a “framework similar to the rule of reason” and that “cognizable efficiencies and business justifications” will be considered. However, because an invitation to collude is “inherently suspect,” such conduct can be condemned under Section 5 without a showing that the respondent possesses market power.

Companies: Step N Grip, LLC

News: Antitrust FederalTradeCommissionNews