Computer manufacturer Hewlett-Packard Co. and office supply retailer Staples Inc. face a consumer class action lawsuit for allegedly agreeing to restrict competition in the market for laser printer ink cartridges. In December, a California resident and owner of an HP inkjet printer, Ranjit Bedi, filed a lawsuit against the companies in the US District Court for the District of Massachusetts. Bedi claims that HP and Staples conspired to reduce competition and raise prices in the HP-compatible ink cartridge market. HP is the US market leader for both printers and replacement ink cartridges, but earns higher profits on sales of ink cartridges.

The complaint states that HP and Staples violated the antitrust laws when they entered an agreement in 2006 according to which Staples ceased sales of its own brand of HP-compatible printer cartridges in exchange for monetary benefits from HP. Such benefits allegedly included more than US$100 million in “market development funds.” According to the complaint, the HPStaples agreement is a horizontal agreement between direct competitors: “It reduces the output of HP-compatible cartridges, increases the price of HP-compatible cartridges, eliminates interbrand competition between Staples and HP and limits nonprice competition in the market for HPcompatible cartridges.”

Bedi claims that the HP-Staples agreement is illegal under the Sherman Act because it restrains trade and fixes prices. He has asked the court to certify a class of similarly situated purchasers of HP-compatible ink cartridges. He has also asked for injunctive relief, treble damages, attorneys’ fees and court costs.