French auctioneers join challenge to eBay’s legal opt-out

France’s auction watchdog the Conseil des Ventes has taken eBay to court in a bid to bring the online giant to heel under the country’s auction laws.

French law requires all auctioneers to be approved by the Conseil and subject to strict rules, including the need to provide transparent accounting and stringent guarantees. The Conseil argue that eBay’s activities define them as auctioneers and that they should follow the rules. eBay continue to claim an independent status as a disinterested party providing an auction platform for others to do business – and so are not an auctioneer.

The Conseil also cited eBay’s online payment system PayPal in the suit it filed at the Tribunal de Grande Instance in Paris on December 3.

Conseil President Christian Giacomotto says the law provides against the sale of fakes and stolen goods, and that there is “a distortion of competition” between eBay and auction firms (who must seek Conseil approval before operating whether they sell online or not).

France’s auction regulations, he declares, are “based on market transparency, responsibility, equal competition and consumer protection” to help prevent tax evasion, money laundering and the trafficking of illegal goods.

EBay, who employ several dozen staff at their Rue de la Banque offices in central Paris, say the Conseil’s accusation is “unjust” as they are merely brokers “facilitating meetings between buyers and sellers”, and that they cannot therefore be considered an auction firm. France is their fourth-biggest market, with ten million registered users.

The lawsuit follows years of discussions between the Conseil and eBay that “have gone nowhere”, says Christophe Eoche-Duval, the Conseil’s general secretary.

The Conseil believes eBay intervenes directly on behalf of both vendors (by ensuring their reserve prices are respected) and buyers (by accepting commission bids), as well as sending both parties emails after the sale. The Conseil also questions eBay’s definition of their commercial activity as “traitement de données” (data processing) and notes that eBay pay “hardly any” corporate taxes in France. The Conseil also believes eBay sell “cultural goods” which, unlike everyday items, are legally subject to Conseil supervision. EBay dispute this.

In June 2007 the Conseil obtained court permission to appoint a huissier [bailiff] to buy and sell on eBay so as to obtain legally admissible evidence in any future court case. The Conseil warned eBay in September that it was considering legal action, then decided to file the lawsuit when eBay failed to respond.

“Ebay have been playing for time, but our patience has its limits,” said Eoche-Duval, who says the Conseil has received many complaints from eBay clients in France, but is at present legally powerless to intervene.

The court’s decision is not expected before next April and, with potential appeals likely to prolong the case for up to two years, any ruling may be superseded in the meantime by the EU’s new “Bolkenstein” Services Directive, which France has vowed to introduce during 2008, and which is expected to overhaul the country’s existing auction law and diminish the Conseil’s role.

Nevertheless, says Eoche-Duval, the court case is “a way of alerting the powers-that-be to what’s going on on the net. If new legislation takes this into account, we’ll have done our job.” He insists though, that “this is not a fight against sales on the web… But the way auctions are run should not be affected by the means used to conduct them.”

French auctioneers have welcomed the Conseil’s move.

In a communiqué issued December 6, Drouot President Georges Delettrez declared that “it is urgent for online auctions to be subject to the same obligations as traditional sales.”

The case comes at a time when eBay are still facing legal action in the French courts from Christian Dior.

Dior want them to prevent fake Dior goods from being uploaded and sold on the site and argue that eBay knowingly profit from their trade through their charges. EBay continue to argue that they are no more than a conduit for sales and have no responsibility for vetting goods in this way – although they will remove fake goods once alerted to their presence.

Further cases from Tiffany in New York and Harry Potter author J.K. Rowling in India are adding to the outcry against eBay’s hitherto protected status on this point.

By Simon Hewitt