EBay Must Defend Claim It Monopolized Payments

SAN FRANCISCO (CN) - A federal judge refused to dismiss claims from a class action that claims eBay monopolized the market for payment systems used in online auctions.

The auction site allegedly raised fees and shut out payment-system competitors after acquiring PayPal in 2002.

The class claimed eBay has made PayPal the only viable option for sellers, and therefore sellers have to pay fees to eBay both for listing and selling their products and for using PayPal.

eBay's accepted payment policy prohibits sellers from asking buyers to contact them for additional payment methods or from asking buyers to use a method a seller did not include in their listing, according to the class. If it believes a seller violates the policy, eBay removes seller's listings.

In January, U.S. District Judge James White disagreed that the class tied its claims of attempted and actual monopolization to eBay's acquisition of PayPal.

The class instead tied the claims to the continued modification of eBay's accepted payment policy. This included prohibiting payments through Google Checkout in 2006; doubling PayPal Buyer Protection in 2007, which allegedly eliminated buyer protection for non-PayPal transactions; requiring sellers to accept electronic payments in 2008.

eBay moved to dismiss claims that the alleged tying between eBay and PayPal harmed competitors, which Judge White denied in an unpublished order Tuesday.

Earlier in this litigation, the judge gave the class leave to amend its allegations, referred to as "tying claims."

"At the hearing on this motion, plaintiffs clarified that the tied product market is narrower and is defined as the national online payment services market for use in online auctions. Plaintiffs also clarified that they allege that the tying product market is the national online auction services market," the judge wrote.

Because the class narrowed its definition of the "tied product market," the court concluded that the alleged tying arrangements could have had a significant effect on commerce, and the plaintiffs' facts "cross the line from possible to plausible."

eBay also moved to strike paragraphs about its acquisition of PayPal in 2002, and of Verisign in 2005, which Judge White denied.

The class claims the disputed paragraphs "demonstrate the historical progression of the eBay/PayPal business empire, a necessity for later proofs." "Although Plaintiffs do not explain what these later proofs might be, on this record, the Court cannot say that the allegations have no possible bearing on the issues in this litigation," Judge White wrote.

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