David Topkins, a former executive at the E-Commerce Merchants Trade Association, an e-commerce seller of posters, prints and framed art, has agreed to plead guilty for conspiring to fix the prices of posters sold online. The one-count felony charge was filed on April 6th in the U.S. District Court of the Northern District of California in San Francisco. According to the charge, Topkins and his co-conspirators fixed the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014. Topkins also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division stated that the case represents the division’s first criminal prosecution against a conspiracy specifically targeting e-commerce. Baer added: “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms. American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses.”
To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement. The full DOJ press release can be found here. There is a link in the press release to the Information, which charges:
II. MEANS AND METHODS
For the purpose of forming and carrying out the charged combination and conspiracy, the defendant and his co-conspirators did those things that they combined and conspired to do, including, among other things:
a. TOPKINS and his co-conspirators participated in conversations and communications with representatives of other poster-selling firms to discuss the prices of the agreed-upon posters.
b. During those conversations and communications, TOPKINS and his co-conspirators agreed to fix, increase, maintain, and stabilize prices of the agreed-upon posters.
c. In order to implement this agreement, TOPKINS and his co-conspirators agreed to adopt specific pricing algorithms for the agreed-upon posters with the goal of coordinating changes to their respective prices.
d. In furtherance of the conspiracy, TOPKINS wrote computer code that instructed Company A’s algorithm-based software to set prices of the agreed-upon posters in conformity with this agreement.
e. For the purpose of reaching agreements on prices, enforcing adherence to the agreements reached, and monitoring the effectiveness of the pricing algorithms, TOPKINS and his co-conspirators collected, exchanged, monitored, and discussed information on the prices and sales of the agreed-upon posters.
f. In accordance with the agreements reached, TOPKINS and his co-conspirators sold, distributed, and accepted payment for the agreed-upon posters at collusive, non-competitive prices on Amazon Marketplace.
The Antitrust Division highlighted that the case was its first e-commerce prosecution. But there are other features that make the case interesting and raise questions that will be answered as the matter develops.
- The conspiracy period is very short. Individuals and companies can usually negotiate to narrow the duration of the conspiracy in return for a plea and cooperation, but the conspiracy period in this charge is extremely short: September 2013 to January 2014.
- Perhaps related to the point above, the press release says that the defendant will pay a fine of $20,000. There is no mention of a jail term or even the possibility of a jail term. This is likely related to the point above—the short duration of the conspiracy. The Antitrust Division however is extremely reluctant to grant “no jail” deals, so the case is exceptional in this respect. [The plea agreement had not been released so it is possible that the while the defendant has not agreed to jail time, he could face the possibility of jail.]
Some of the questions raised by the case filing and press release may be answered in further developments.