Customer Files Class-Action Suit Against HP & Staples, Charging Printer Ink Price Collusion

Ranjit Bedi, a Californian, has filed a lawsuit against Hewlett-Packard and Staples in a U.S. District Court in Boston, accusing the two companies of colluding to prevent the sale of third-party ink cartridges in Staples stores. Bedi is accusing HP of paying Staples over $100 million to get it to stop selling lower-priced ink refills, but none of the news sources we found supply any evidence to support that figure, so we hope Bedi has more than just a gut feeling about this.

HP and Staples won’t comment on the lawsuit right now while they’re reviewing it, but CMP, a marketing company for the technology industry, contacted various partners of Hewlett-Packard to get their opinions. One HP partner told them he wouldn’t be surprised if an agreement existed:

That is how big box retailers can make their money [selling products like printer supplies], by sometimes selling at ridiculously low prices. I can’t beat those prices. The only way I can make money is through services. In turn, Staples probably has an agreement with HP to sell a certain amounts of cartridges.

However, another HP partner told CMP that “he doubted HP would enter into such an agreement, but said Staples might have acted on its own to favor HP.”

“I have a hard time believing HP paid Staples market development funds because of the way the industry works,” Senecal said. “HP does not permit use of market development funds for discounting products. HP states throughout their market development program that market development funds can’t be used for discounting products. I don’t believe they would make a whole separate agreement with Staples from the entire channel.”

Seneca said it is possible Staples is acting on its own to further sales of HP printing products. “I’m sure Staples is trying to differentiate itself as a reseller of HP by being more attuned to the HP product line.”

“$8,000-per-gallon printer ink leads to antitrust lawsuit” [ArsTechnica]
“HP, Staples Antitrust Lawsuit Focuses On Market Development Funds” [CRN/CMP]

RELATED
“Printers Prompt For Ink Replacement Before Ink Is Out”
“Kodak To Cut Printer Ink Prices by 50%”

Comments

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  1. Coder4Life says:

    HP has always done market reviews and check to see if a store is carrying 3rd party ink. Where the 3rd party ink is located.

    If the 3rd party ink is located near the HP branded ink they will try their best to get them to move it to a different section.

    They also will try and get the store to not put 3rd party ink’s out on the store shevles as well.

    The $100 million deal? NO clue. but very possible. I woulnd’t be surprised..

  2. junkmail says:

    This is nothing new. Epson recently sued several companies that made/imported replacement cartridges.

    Quoted:
    As some of you may be aware Epson America, Inc. filed a complaint with the above named government agency (International Trade Commission) as well as a lawsuit in U.S. District Court against 24 companies that had been importing inkjet cartridges which Epson argued violated U.S. patents held by Epson. The ITC ruled in favor of Epson on all grounds, and issued a number of orders mandating compliance from importers, resellers and other parties not named in the complaint or suit.
    [www.itc.epson.com]

    Why bother paying retailers when you can just bully them out of business? This really sucks because MIS, (one of the companies affected) were the only ones that made fine-art b&w inks for epson printers. I loaded up before the ban took effect, but once it’s gone, no more Epson products, EVER.

  3. scampy says:

    Well since printer manufacturers sell printers for less money than they cost to make they have to make up the money on ink so I can see why they dont want people buying 3rd party ink. They could on the other hand raise the price of printers but then people would bitch that they cost too much or they would buy a Lexmark instead of an HP then they would complain because the Lexmark ink cost twice as much as HP ink because Lexmark still needs to make up the loss on printers in ink.

  4. BK88 says:

    It wasn’t the money from HP. My folks are in the laser toner cartridge rechargin/remanufacturing business and I have learned a lot recently, including why the buy back of used cartridges has slumped in price.

    Staples bought the company that sold them remanufactured cartridges to do it cheaper for there store shelves. HP said, well if you sell remanufactured cartridges, then you can’t sell our new printers. That’s why Staples pulled them back so much, and the market for used cartridges dropped to the bottom.

    A friend of ours recently calculated how much per gallon ink was, and his number was $4000/gallon. Guess it depends on how which one you get. (Even though most of the cost is for the plastic and wiring in the inkjets anyway.)

    –BK

  5. jl3 says:

    I own an office supply company. I sell both HP and compatible (remanufactured) cartridges among other things. Staples still sells all those remans, they’re just phasing them out of their catalog so people don’t know about them. Speaking from experience–if you get a *good* compatible (such as Nukote or Innovera) they are every bit as good as HP but at half the cost. And about twice the margin for resellers.

  6. swalve says:

    Boy do I hate refilled cartridges. Most people don’t know what they’re getting, and then suddenly their printer quits printing correctly and HP (or whoever) gets blamed.

  7. Parting says:

    Pleaaaase, HP simply offers a bigger profit margin to Staples, in exchange of absence of generic cartridges. That probably the truth.

    100$ million off the books in exchange of exclusivity sound more like Godfather movie.

  8. wring says:

    why the eff are they buying replacement cartridges from Staples???? there are a lot of local franchises that sell third party ink they can support, not to mention the kajillion online stores. waaaaaaahmbulance! glad someone brought up Epson. they’re trying to exterminate Epson compatibles altogether.

  9. Parting says:

    @wring: I hate Epson’s all-in-ones, I had CX4600 and the cleaning head is constantly clogged, which wastes ink for head cleanings. Unless they build better machines for the public, I prefer spending 8000$/galon of Canon’s or HP’s ink.

  10. mysterious_d says:

    So this claimant is saying that Staples willfully took money out of its own bottom line through highly profitable ink/toner sales to secure a one-time payment from a single vendor.

    Wow.

    I am almost sure that it’s legally grey to remanufacture something and rebrand it as your own, or build something that’s already patented through a vendor. I think the fault lies with HP and not Staples, and this lawsuit will be filed next to the one where the crazy old man sued God for killing his pigeon.

  11. DallasDMD says:

    @scampy: Cartridges are a recurring cost. The printer is a one-time cost. That is why the business model is done that way.

    Given the choice, I’d rather have a printer sold for a higher price and cartridges at reasonable prices.

  12. BlackBirdTA says:

    When I go to Staples, I’ve noticed that the Lexmark brand cartridge is actually cheaper than the third party reman cartridge. The last time I went to get ink, they were out of Lexmark, so I had to get the Staples brand. The cartridge has actually lasted longer, but the ink smells like ass.

  13. clevershark says:

    Canon’s strategy for keepin’ the ink revenue flowing is brilliant: on (at least some) all-in-ones they make, the scanner will stop working unless you have functioning ink tanks in place, when there is absolutely no reason for this to be the case — unless ink is somehow an essential ingredient for scanning a document and I didn’t get the memo…

  14. Parting says:

    @clevershark: Which all-in-ones? Any link where I can find this out. (I’ll have to buy one soon)

  15. LatherRinseRepeat says:

    @CLEVERSHARK:

    Really? That sounds weird. Did you try disabling the Canon print monitor software?

    I think Canon is one of the better companies when it comes to inkjet printers. At least their ink cartridges don’t have a time bomb feature like HP does. And their cartridges are clear so you can see the amount of ink you have left. Another bonus feature is that in most/all of their inkjet printer, the print head and the ink cartridge are modular units. So if your print head goes bad, just buy a new one and keep the ink cartridges you were using. I think with HP, the print head and ink tank are all-in-one.

    Anyways, my next printer will be a Samsung color laser. The per page printing cost is much cheaper for regular documents. And I’ll use my Canon inkjet strictly for photo printing.

  16. Parting says:

    @LatherRinseRepeat: Good luck with Samsung =P I have a pal working at a private repair center, and he refuses to buy anything of this brand. He says that most of the stuff he repairs is Samsung. Most of the stuff dies couple of month after the warranty expires.
    That’s just his opinion.

  17. dabofug says:

    Why buy cartridges at all? I’ve got 5 printers in my office (99% mod quality grayscale output) and 2 @ home. I purposely bought the printers to all use the same cartridge, then used bulk refill (I used inksell.com, buy black by the liter, they even have handy MPGs online on the refill process) and set all the printers at greyscale fast normal or draft default. My wife and kids can generate page after page of full color unnecessary crap.
    Once a week I inject about 5cc of bulk black in each office cartridge (takes about 20 sec/cart) and no prob. When I need qual/color, i just reset prefs & print.
    To me the biggest ripoff is a printer (like my older sturdy all-in-one HP that I use as a fax) which, even though it has NEVER been used for color anything, refuses to fxn unless the color cartridge is filled. Just filled it with bulk black. Screw them.
    Have saved not only mucho dinero, but no longer have to run out in the cold @ midnight to buy a $30 black cart from the local deli after the kids have printed out their Neopet stuff in “Best” photo mode.

  18. XTC46 says:

    I doubt they paid them directly. I wouldn’t doubt they have it in their agreement that if they want to sell HP printers, they wont sell 3rd party ink.

  19. brokennails says:

    I have an HP printer, and the damn thing was able to sense I’d bought a refilled cartridge. I got an error message saying that it was a non-brand cartridge (or something to that effect), and it would not work.

    My printer also will not work if one of the two black/color cartridges is empty/missing. Meaning, I cannot print a black and white text document if the color cartridge is out.

    AND I have to replace cartridges even if they’re not out of ink! After about 6 months or so (according to the manual, which I read more closely after discovering the previous two gems), the “connections” can “deteriorate” on the cartridge, requiring me to replace them.

    I WAS SO ROYALLY PISSED that I almost threw the thing out the window. The black cartridge had run out, I bought a cheapo cartridge, the printer wouldn’t accept it, I returned it for the name-brand, then two days later I got an error message about the color cartridge even though it wasn’t out of ink, but the connectors weren’t good anymore… GAAAH.

  20. brokennails says:

    @clevershark: Yep, that’s what happened to my HP, pretty much.

  21. ageshin says:

    If you remember the good old days one would buy a typewriter and the ink ribbons cheep, as the machine was where the manufacturer made its money. The same was true with the early printers, as one could even re-ink a printer ribbon. With the onset of inkjet printers a whole new world of greed took over, as the machine was cheep and the ink was expensive. I once had a printer that I threw away when I discovered that the printer inks cost more than the printer. Ink my friend is cheep, no mater what the companies say, its their greed that is expensive. I never by a printer that does not have a cheep third party ink cart available. Its either that or go back to the type writer and ball point pen.

  22. XTC46 says:

    ink cartridges are printers version of a cell phone contract. You get the hardware cheap (just like cell phones) with the expectation that you will be buying ink for a couple of years to make up for it.

  23. no.no.notorious says:

    all/most companies do this.

  24. North of 49 says:

    Non-HP cartridges void your warrantee if the problem that you are calling in is because of the ink/toner. Refilled cartridges as well.

    BUT – if the HP cartridge is still under warrantee – they are under a seperate warantee – you can get them replaced by HP.

  25. trollkiller says:

    @North of 49: Non-HP cartridges void your warrantee if the problem that you are calling in is because of the ink/toner. Refilled cartridges as well. I understand what you are saying but I want to clarify it for those that may not.

    If your after market brand cartridge breaks your printer your warranty can be voided. Simply using an after market cartridge will not void your warranty unless the company has successfully argued for a variance.

    Title 15 Chapter 50 §2302.
    Rules governing contents of warranties
    [www4.law.cornell.edu]
    [uscode.house.gov]

    (c) Prohibition on conditions for written or implied warranty; waiver by Commission

    No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibition of this subsection may be waived by the Commission if-

    (1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and

    (2) the Commission finds that such a waiver is in the public interest.

    The Commission shall identify in the Federal Register, and permit public comment on, all applications for waiver of the prohibition of this subsection, and shall publish in the Federal Register its disposition of any such application, including the reasons therefor.

    [consumer-law.lawyers.com]

  26. trollkiller says:

    Damn it, I forgot to close a tag…. sorry

  27. ShadowFalls says:

    I still always wonder why alot of coupons you get for stores like Staples and Office Depot exclude HP printer ink, and only HP’s.

  28. HOP says:

    this ink stuff is one of the biggest rip-offs ….i’d like to have 10 gals of any of those inks…i could live well off the profits…….

  29. EricaKane says:

    HP lost my business with their “time bomb cartridge” Now I have a Canon and a Brother, both work fine.

  30. Amelie says:

    @swalve said:”Boy do I hate refilled cartridges. Most people don’t know what they’re getting, and then suddenly their printer quits printing correctly and HP (or whoever) gets blamed.”

    NO! Most people decide it was the fault of the refilled cartridge.

  31. HRHKingFriday says:

    Hah! This reminds me of a survey I took for HP (re the printers at work). They were trying to see if having an HP at work would “inspire” me to have one at home. Eff that, I say! Why bother printing digital photos, and why bother printing out a couple black and white forms I can easily print at work? I can’t deal with ink cartridge prices, and then the fact that half the time they don’t even work anyways.

  32. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    Screw an Inkjet. Get a decent laser & buy 2 toner cartidges year. They may cost more upfront (but not per ml of toner), but they last longer, are faster & the print quality is better.

    Our company does at least 5000 prints a month & we won’t use inkjets for anything cause they are such a money pit.

  33. Snarkysnake says:

    I’ve had the same problem that everyone else here has had:Unconscionably high prices for proprietary inks. Workaround: 1) Get a Canon cheap (you can find them in thrift stores practically new because they ran out of starter cartridge ink and the dumb ass boss said get rid of it).2) Get ink carts on Ebay for a fraction of the cost. 3) Pound a cold one (or two) with the money you save.

  34. North of 49 says:

    If your after market brand cartridge breaks your printer your warranty can be voided. Simply using an after market cartridge will not void your warranty unless the company has successfully argued for a variance.
    You’re not covered. The warrantee is still “intact,” but if the cartridge has done something to the machine, too bad, so sad.

  35. wring says:

    @xtc46: best analogy yet.

  36. KIRZEN2007 says:

    Folks are making some strange assumptions about refilled and remanufactured cartridges. When I was working in a computer store that specialized in cleaing and refurbishing older printers we used to see all sorts of nightmares, but in all honesty these nightmares were straight across the board. “Official” cartridges seemed just as prone to gummed up print heads, bad elevator sponges, and gearing issues as their lower priced alternatives. My order of preference is as follows:

    1 > Company rebuild (About 50% off retail) (An official cartridge from the cartridge manufacturer, refilled by professionals. These usually come with a warranty as long as you’re using a reputable place).

    2 > Official rebuilds (About 20-40% off retail) (Some companies, like HP will sell resellers an OEM cartridge and will take back empties. This saves about 20-40% of the cost of a retail cartridge in its retail packaging)

    3 > 3rd party (About 40-60% off retail) (Some companies have decent ‘compatibles’, some companies have garbage. Good luck trying to push for support if your cartridge fails, refuses to print, or destroys your printer)

    4 > Amature refills (About 80% off retail) (We used to see a half dozen a week, bad HP refills, where someone’s refilled their cartridge poorly, drilled a hole in the wrong place, destroyed the wiring, and in many cases done serious damage to their printer by using a cheap refill kit). {This is on the list because it happens, not because I’d ever contemplate using it}.

    The number one problem people experience with printers is that they’re poorly maintained. If you keep your cartridges clean, your printer dust-free, and your supplies fresh (don’t print with an ink cartridge that’s sitting idly in the printer for a year) your printer will last for ages and ages (providing its a sturdy brand).

    Some tips? I buy my printers with three things in mind:

    1 > Weight! (Seems funny, but if I pick it up and it feels too light, it goes right back on the shelf. Plastic shifts during operation, breaks down more easilly, and responds poorly to stresses caused by moving components.)

    2 > Ease of cleaning (If I can’t get my hands into it to clean the tracking bar (where the print head slides back and forth), or dust the insides effectively, or clean the rollers, it likewise goes back on the shelf)

    3 > Color seperation (I like having seperate color cartridges, at the very least black and color must be seperate.)

    4 > All the other jazz (Print cartridge cost, brand comfort {All hail Canon, every time I call them I get a real person, who knows their stuff, speaks english, and seems happy to help me… and I get them in 5 minutes or less}, and specifications {imagine that, things like PPM are less important to me than if it works}

  37. toddkravos says:

    I stopped shopping at staples when they informed me that they do not issue gift reciepts when asked.

    I know it’s somtething that retailers are not required to do, but the suggestion of “just give the gift recipient the sales reciept with the gift” is and still is simply not an option in most situations.

    If Target and the ilk can do gift receipts any time of the year, Staples should be able to follow suit.

  38. SacraBos says:

    @chouchou: I have a Samsung ML1750, and it’s been fantastic. It’s a low dollar laser, but I’ve had it for years, talks to Linux(!). The toner cartidges are almost as much as the printer, but do last a long time (over a year since my last change, but I’m not high volume), so maybe there’s a good value in that… It does have a “toner save” mode, which uses about half the toner, if you don’t mind grayer output.

  39. SaraAB87 says:

    I just bought an HP printer and a remanufacturered print cartridge from a reliable online seller. Not only did I save money on the cartridge but the printer recognized it perfectly, and I just bought this printer back in September.

  40. econobiker says:

    @KIRZEN2007: RE you #2> Have you ever seen the HP ink “spooge” cup inside of some printers? I had a larger page 11×17 at one employer which had an ink stalagite in it when I started working there. I am guessing HP made out on that one due to the volume of ink I cleaned from it… Cleaning cycle -indeed!!!

  41. chrisbacke says:

    I’ll be happy to claim my share of the class-action suit… Any bets on what it’ll be? I’ll guess $10 or a coupon for a free black cartridge (HP only, of course)

  42. John from Huntersville says:

    My HP color (78) cartridge has been warning me that it’s low on ink for 3 months now. It does the same with HP black (45) cartridges. I am using an HP 1215 printer.

    I just print till it starts skipping then change the cartridge that’s skipping.