In what it is calling the Antitrust Division’s “first criminal prosecution against a conspiracy specifically targeting e-commerce,” the Department of Justice has announced that an individual has agreed to plead guilty to charges that he conspired to fix the prices of wall posters sold online through Amazon Marketplace. The matter is United States v. Topkins, No. 15 Cr. 201 (N.D. Cal.).
According to the criminal information, David Topkins, who worked for an online seller of posters and framed art, and his co-conspirators fixed the price of certain posters sold online through Amazon Marketplace, a website that allows third parties to sell items to consumers. The information further alleges that Topkins wrote software code that instructed his company’s system to set prices at the agreed-upon levels. These posters were allegedly then sold at non-competitive prices in violation of Section 1 of the Sherman Act. According to the DOJ, Topkins has agreed to plead guilty for conspiring to fix the prices of posters sold online, pay a $20,000 criminal fine, and cooperate with the ongoing investigation. His plea hearing is scheduled for April 30.
Although the Antitrust Division’s proof will not be tested in court this time, future prosecutions of e-commerce cartels may raise unique issues. For example, the widespread use of pricing algorithms or dynamic pricing models, which can automatically adjust the price of a product based on certain factors, may affect how the government proves an “agreement” among horizontal competitors in a specific online market. It remains to be seen whether the DOJ can rely on the types of evidence—such as memos, emails, phone calls, notes of meetings, price or customer lists, monitoring, and surveillance—that it typically uses in cartel cases to prove price fixing schemes in e-commerce. We will be monitoring this case, as well as any other e-commerce prosecutions, in the coming months.