Judge Allows Payment Monopoly Lawsuit Against eBay/PayPal To Proceed

When you go to the eBay Seller Information Center section about how to accept payments, there is no mention of any other payment service than PayPal, which as you likely know, is owned by eBay. This oh-so-close relationship is at the core of a lawsuit against the online auction site.

Plaintiffs in the lawsuit accuse eBay attempting to monopolize the online payment systems used on its site, and that it has “limited and banned competitors in an attempt to maintain its dominance in the online auction market.”

Earlier this week, a federal judge in the Northern California-based U.S. District Court, denied eBay’s request to have the lawsuit dismissed.

Among the evidence cited in the lawsuit is a claim that eBay pulled the plug on sellers’ ability to use Google Checkout — which charged less per transaction than PayPal — only three days after it became available to use on the site.

The plaintiffs also claim that a 2007 change in PayPal Buyer Protection effectively eliminated buyers’ protection for non-PayPal transactions. Thus, sellers were allegedly compelled to accept PayPal.

Back in January, the judge in the case had dismissed a portion of the plaintiffs’ case, saying it was too broad to allege that the eBay/PayPal union had a negative effect on the entire online payment market. However, he did allow the complaint to be amended to narrow that scope to the online auctions market.

By focusing in on this specific market, the judge ruled that the fact presented in the plaintiffs’ complaint “cross the line from possible to plausible.”

Explains the judge:

In light of the significantly narrowed definition of the tied product market, the Court concludes that the facts alleged are sufficient to show that the alleged tying arrangement would affect a non insubstantial amount of commerce in the market for on-line payment services for use in on-line auctions.

The class-action suit now inches toward a possible trial.

EBay Must Defend Claim It Monopolized Payments [CourthouseNews.com]