
Man Prosecuted for Price Fixing on Amazon Marketplace - prostoalex
http://recode.net/2015/04/06/u-s-announces-first-antitrust-e-commerce-prosecution/
======
modeless
That this is prosecuted in a world where Comcast can say "oh, our service
areas just happen to exactly not overlap" and "we'll install 2 gigabit service
but _only_ where it's absolutely required to undercut our newest competitor
and nowhere else ever", is a travesty.

~~~
steego
It's the same world where the government will fine you a hundred million
dollars for price fixing, but then prop you up with billions of dollars in
subsidies.

Lysine Price Fixing [http://en.wikipedia.org/wiki/Lysine_price-
fixing_conspiracy](http://en.wikipedia.org/wiki/Lysine_price-
fixing_conspiracy)

Cato's Study in Corporate Welfare
[http://www.cato.org/pubs/pas/pa-241.html](http://www.cato.org/pubs/pas/pa-241.html)

Time and time again, it seems that paying fines are simply a small cost of
doing business if you're large and influential enough to have friends in
government.

------
joshjdr
I question what justice is being served here. This doesn't appear to be
monopolistic control of the market or price fixing. Consumers are allowed to
use price analysis, communication, and deal finding tools, so why not sellers?

If this is truly the first DoJ action prosecuting e-commerce, it makes me
wonder if this is a case of someone being effectively forced into a plea,
similar to what gets outlined here:
[https://news.ycombinator.com/item?id=9323758](https://news.ycombinator.com/item?id=9323758)
This seems like peas compared to some of the recent alleged price-fixing
scandals, i.e. Apple & e-books.

~~~
anigbrowl
_Topkins was accused of conspiring with other poster sellers to use
algorithms, for which he wrote computer code, to coordinate price changes, and
then share information about poster prices and sales._

How is that not price fixing?

~~~
joshjdr
In the absence of monopolistic control of the market/supply, I don't consider
it any more meaningful than an attempt to optimize pricing.

It's an important difference, when a new seller can easily enter. Another
commenter mentioned the price on a used book going up to $23 million based on
algorithmic pricing. This creates an opportunity for another seller to sell
the book at a reasonable price, while the two attempting to price collude sell
nothing.

This is not the equivalent of a single entity acquiring an entire nations
supply and distribution of oil to eliminate competition and raise prices, or
five out of five major book publishers colluding on the pricing of new
releases.

~~~
wlesieutre
Price fixing isn't when a single company controls the market and jacks prices
up, it's when multiple competitors in a market get together and say "Instead
of competing, let's collectively inflate our prices so that we make more
money."

As a recent example, LG, Samsung, Toshiba, Hitachi, Sharp, Sanyo Epson, and
others all colluded to keep prices on LCD panels artificially high for years.

[http://www.fbi.gov/news/stories/2012/november/lcd-price-
fixi...](http://www.fbi.gov/news/stories/2012/november/lcd-price-fixing-
conspiracy)

[http://www.ctvnews.ca/business/multimillion-dollar-
settlemen...](http://www.ctvnews.ca/business/multimillion-dollar-settlements-
reached-in-lcd-price-fixing-class-action-1.2000656)

I suppose book selling has a much lower barrier to entry than LCD
manufacturing, but it's still tough to argue that coordinating prices with
your competitors is an acceptable practice.

------
fragsworth
It's odd how there's prison time for price-fixing collusion between competing
entities, but obtaining a monopoly (and therefore price-fixing) is far worse,
but usually doesn't get punished or even questioned until the public starts
having problems with it.

~~~
smt88
Which monopolies are you talking about?

In the OP, some small fish were colluding. The only unregulated monopolies I
can think of (Google search, Apple App Store, Monsanto, Boeing) are very large
and powerful, and they'll certainly have many national politicians in their
pockets.

So I don't find it odd that large monopolies aren't busted very often. It's a
predictable outcome of a money-driven political system.

~~~
steve19
People frequently confuse price-fixing with monopolies. There is nothing
illegal about having a monopoly. What is illegal is forming cartels and
collusion to create restraint/constraint of trade [0]

Patents are an example of government granted monopolies (on an idea). The
government also grants monopolies to certains businesses or organizations [1].
Government is itself a monopoly of sorts (they don't offer or allow you a
choice in Law Enforcement provider).

Boeing may be a domestic Monopoly, but only because the size, scope and IP of
the organization is hard to replicate. What would have been illegal if they
had colluded with Communication Sat providers or NASA to prevent Musk from
starting SpaceX. There is no evidence I can see that would prevent a
sufficiently motivated entrepreneur from competing with them in the Aerospace
Defense sector. Politicians are equal opportunity providers, they accept
brides (donations) from anyone with a big wallet ;)

[0]
[http://en.wikipedia.org/wiki/Restraint_of_trade](http://en.wikipedia.org/wiki/Restraint_of_trade)

[1]
[http://en.wikipedia.org/wiki/United_States_Postal_Service](http://en.wikipedia.org/wiki/United_States_Postal_Service)

~~~
simoncion
> they accept brides ... from anyone with a big wallet ;)

Tee hee.

But, seriously:

> [Government doesn't] offer or allow you a choice in Law Enforcement
> provider.

The rise in private security firms and private offender-rehabilitation firms
[0] kinda act as defacto law enforcement for some of the lower class.

[0]
[http://www.slate.com/articles/news_and_politics/crime/2015/0...](http://www.slate.com/articles/news_and_politics/crime/2015/02/shoplifting_at_whole_foods_or_bloomingdale_s_pay_corrective_education_company.single.html)

~~~
paulornothing
Well it's more like private security. People don't pay much attention to this
mainly because stealing is bad in most people's eyes. People are not so
concerned if it's actually legal or not to detain someone and basically
blackmail them.

------
pmorici
How did this even come to their attention. The guy was selling posters of all
things. You would think there are bigger fish to fry within this category of
crime.

------
marincounty
Amazon needs to keep an better eye on third party sellers. The make a big deal
about the initial credit check(which is easy to get around), and seem to turn
a blind eye to customer complaints?

Yes, I'm glad our current administration goes after Price fixers. Price fixing
is wrong, and frustrating. I don't find it cute at all.

------
BorisMelnik
can someone ELI5 exactly what he did (from a technical standpoint) and why
this is wrong both ethically and legally? not being facetious genuinely
asking.

I read the whole article, I get that he changed the prices but why is that
wrong? Don't people change prices all the time based on algorithms?

~~~
elmin
He colluded with other sellers to 'fix' prices. In a fair market, individual
sellers set their own prices. This works to limit the ability of one seller to
price gouge. If they charge too much, a competitor will undercut them,
gradually lowering the price to a fair deal for both buyers and sellers (in
theory).

If the sellers all collude however, they can set whatever price they want.
This can force buyers to pay more than is 'fair'. In the US, following some
major issues with the railroads, antitrust laws were inacted. These laws make
getting together with your competitors to set prices illegal in some cases.
Some people think this is just a part of doing business. Others believe it's a
necessary protection for consumers to maintain a fair market economy.

~~~
sireat
Collusion on price is the same behaviour that is seen across produce
markets(also swap meets et al) across the world. TV teams usually do their
yearly investigations but nothing happens.

Let's not talk about price collusion in hard drives, pencils etc etc.
[https://news.google.com/newspapers?nid=1755&dat=19540206&id=...](https://news.google.com/newspapers?nid=1755&dat=19540206&id=kyAhAAAAIBAJ&sjid=0mQEAAAAIBAJ&pg=2996,789994&hl=en)

In fact it is quite natural for sellers to try to price-fix if you think about
it.

The regular sellers at the produce market do not want to piss off each other
and realize that selling at the bare minimum profit (or loss) would hurt them
all and slowly collusion is reached. Sure a few outcasts would try to lower
the prices but they quickly learn if they want to survive and be there for a
longer time. It happens because the cost of goods is very similar to all
sellers and competing on price alone is not going to make anyone happy(not
even buyers).

What always confused me about collusion in marketplaces like Amazon is that it
seems that it would be much harder to find everyone to agree on pricing and
that rebels and rule breakers would be more prevalent.

------
anton_tarasenko
Doesn't Amazon itself violate the Robinson–Patman Act with its dynamic
pricing?
[[http://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act](http://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act)]

~~~
elmin
What evidence is there that Amazon sets different prices for different users
for the same goods?

~~~
anton_tarasenko
This, for example: "We do, however find some price variations for Kindle
ebooks on www.amazon.com, depending on if the user is logged in to the site or
not." [[http://arxiv.org/abs/1307.4531](http://arxiv.org/abs/1307.4531)]

Also see Figure 1 for the evidence of prices highly varying over time. It
implies that different users pay different prices within small periods of
time.

------
TeMPOraL
> _a man has agreed to plead guilty to conspiring to illegally fix the prices
> of posters he sold online_

So correct me if I'm wrong, but we don't actually know whether he was guilty
or not, right? He may just have pleaded to avoid the costs and the hassle of
longer process?

(I don't want to spin it into a discussion about plea bargains - it's just
that I'm not from the US, I just want to know if I understand the phenomenon
correctly.)

~~~
paulornothing
Well if you plead guilty you are saying you are guilty. You are correct there
could have been a deal struck and it was just better in the end to not take
the chance in court.

------
downandout
The interesting thing about this is that the collusion made it illegal, but
collusion was probably unnecessary. If someone released an open source pricing
tool that would modify prices based on the pricing of the other sellers and
and sales data/profits for the individual merchant, the effect would be much
the same but it wouldn't be illegal.

