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Post date: September 20 2005

Agreement Helps Ensure Competition Among Internet Retailers

Attorney General Spitzer today announced an innovative antitrust agreement with a company that runs web sites for some of the nation’s largest sporting goods retailers.

Under the agreement, GSI Global Commerce, Inc., (GSI) will implement broad reforms to promote competition among retailers, and to prohibit sharing of price information.

The settlement is one of the first in the nation to apply the antitrust laws to Internet retailing practices.

"The great advantage of the internet is that it helps consumers compare products and prices," Spitzer said. "Our action in this case helps ensure that consumers will have the ability to do just that."

GSI, based in King of Prussia, Pa., runs the web sites for many of the nation’s largest sporting goods retailers, including Modell’s, the Sports Authority and GI Joe’s.

Although GSI’s web sites bear the names of sporting goods retailers and appear to be the stores’ actual web sites, it is GSI, and not the retailers, that actually operates the web sites and sells merchandise to consumers. While the retailers may propose pricing levels for their products, GSI has the final say on the price actually charged to consumers.

The Attorney General’s office alleged that under this business model, GSI could set on-line pricing by sporting goods retailers that were supposed to be competing with each other. As a result, consumers searching prices on the web would not learn of discounts available directly from the retailers and would end up paying more than they had to for certain items.

The terms of the agreement require GSI to provide greater information to consumers about its role in managing the web sites, and ensure that it does not discourage competition among the sporting goods retailers.

In addition, the agreement includes the following:

  • Prohibitions on GSI transferring price information among sporting goods retailers;
  • A bar against any contract clause that would require the retailers to advertise their products on-line only through GSI;
  • A requirement that GSI allow retailers to link to price information for their stores, when GSI itself will not post that pricing information; and
  • Expanded disclosure of GSI’s role in the site to visitors who seek such information.

While not admitting to any wrongdoing, GSI agreed to pay $30,000 to cover the costs of the investigation.

The matter was handled by Assistant Attorneys General David Weinstein and Emily Granrud, and Director of Litigation Bob Hubbard, of the Attorney General's Antitrust Bureau, and the Division of Public Advocacy’s Economist, Hampton Finer.


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