Australia Rules Against eBay and PayPal

In April, eBay filed a notification with the Australian Competition and Consumer Commission (ACCC) seeking permission to circumvent section 47 of the Australian Trade Practices Act of 1974, which disallows businesses from creating exclusive deals that have the purpose or effect of lessening competition, in order to more fully integrate PayPal into its operations. As the ACCC put its, “Generally speaking, [the Act prohibits] exclusive dealing involves one business trading with another person, imposing restrictions on their freedom to choose with whom, or in what, it deals.” Today, the ACCC released a draft notice denying eBay’s request.

At the heart of the request from eBay was the auction giant’s desire to change its terms of service at its Australian property to force sellers to use only PayPal or cash on delivery as payment methods. “All eBay transactions must be paid for using PayPal, Pay on Pickup or by Visa/MasterCard processed by PayPal, and not through the use of any other payment method,” said eBay of the proposed change. Starting on May 21, eBay took a first step toward that change by requiring that all sellers offer PayPal as a payment option.

eBay argued that these changes will lessen the likelihood of “bad buyer experiences” by increasing trust and security between buyers and sellers. But competitors, including Google (allegedly), Paymate, eWay, Qpay, BPAY, American Express, and a handful of eBay seller organizations and Australian banks have lodged counter arguments with the ACCC.

About individual 650 eBay users also submit counters to the ACCC. According to the Comission, “The overwhelming majority of these submissions were opposed to the notified conduct and raised concerns regarding restriction of choice, increased fees and issues associated with PayPal’s security, dispute resolution and customer service.”

In the end, the ACCC decided that the proposed eBay TOS changes would have “the effect of substantially lessening competition in the market in which PayPal operates” and likely result in “reduced choice for consumers, higher transactions costs and reduced innovation in online payment systems.” Therefore, the ACCC released a draft notice denying eBay’s request. However, this isn’t necessarily the end of the issue. Under ACCC rules, eBay has the right to request a public conference at which all interested parties may speak their case to the ACCC, after which the Commission may reconsider their ruling.

For now, though, PayPal will not be the only option for eBay users in Australia — and for that, sellers are mostly very happy. eBay’s seller forums are this morning filled with threads of almost unanimously happy sellers cheering on the initial ACCC ruling and musing over what effect it might have on governments in other countries where eBay operates.

Facebook Comments