EBAY eBay Inc

Lawsuit accuses three from e-commerce rival of breaking racketeer laws with alleged lure

By Sarah E. Needleman 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 2, 2019).

EBay Inc. is suing three Amazon.com Inc. employees who it claims worked to illegally recruit its third-party sellers, the latest twist in a nearly yearlong tussle between the e-commerce competitors.

The lawsuit, filed Wednesday in a San Jose, Calif., federal court, accuses the trio of violating federal racketeering laws and claims they knowingly harmed eBay to bolster profits for their employer and themselves. An Amazon spokeswoman declined to comment on the latest suit.

EBay first raised the allegations in a cease-and-desist letter it sent to Amazon in October saying the Seattle firm had contacted EBay sellers on a platform used by many to communicate, and attempted to persuade them to leave the marketplace. The letter claimed that roughly 50 Amazon sales representatives world-wide had sent more than 1,000 messages to sellers on its platform.

Lacking a response from Amazon, eBay then filed suit against the company over the matter about two weeks later. That case is now in arbitration.

David Grable, an attorney for eBay, said Thursday that the company brought its suit in part because a person with firsthand knowledge of the alleged scheme came forward with new information.

EBay's new lawsuit targets Amazon managers it believes to have helped coordinate the alleged scheme. According to the complaint, the defendants and other Amazon employees directed dozens of sales representatives in the U.S. and overseas to set up eBay member accounts to use the platform's internal messaging system to recruit sellers.

The alleged maneuver violated eBay's user agreement and policies, and induced eBay sellers to do the same, the lawsuit said. Amazon representatives, in communication in sellers, worked to avoid detection by providing unconventional phone-number formats and suggesting that merchants write those numbers down and then delete the messages.

EBay and Amazon have been rivals for years, as both rely on independent merchants to stock their virtual shelves with consumer goods. EBay doesn't sell its own merchandise, while Amazon does. In April, Amazon Chief Executive Jeff Bezos said 58% of items sold through the company's platforms are from third-party sellers.

Amazon has faced intense scrutiny in Washington alongside several other tech giants over their size and business practices. The Justice Department said last month that it was opening a broad antitrust review into whether the companies, which also include Facebook Inc., Apple Inc. and Alphabet Inc.'s Google, are unlawfully stifling competition.

Amazon is also subject to a European Union antitrust investigation into its treatment of its merchants. The European Commission, the EU's top antitrust enforcer, said in July that its investigation would examine whether Amazon is abusing its dual role as a seller of its own products and a marketplace operator.

The latest eBay lawsuit also accuses the defendants of providing quotas for Amazon representatives to recruit eBay sellers who could supply trending items or amplify the company's product offerings.

"I work directly for Amazon and our Shoes and Softlines department is still looking for great sellers like yourself to help 'fill in the gaps' in our 3P marketplace," one Amazon representative wrote, according to the complaint.

"Because of the email moderators on here, would you be willing to speak on the phone tomorrow," the complaint says a different representative wrote.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

August 02, 2019 02:47 ET (06:47 GMT)

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