U.S.: States Might Be Hindering E-Commerce

The U.S. Federal Trade Commission (FTC) plans to examine whether individual states are acting in an anticompetitive way toward e-commerce. According to the FTC, the states' actions might be costing consumers as much as US$15 billion per year.

The commission said it will hold a three-day workshop in October to solicit input from representatives of several industries that face regulation on a state-by-state basis.

Giga Information Group analyst Andrew Bartels told the E-Commerce Times that the FTC is likely to find that some industries must deal with state laws and regulations that could make it difficult for them to use the Internet to its full advantage.

"There's no question that there is a patchwork of specific state laws governing industries, particularly those like alcohol sales and real estate," Bartels said.

"In some ways, [these laws] are undoubtedly a hindrance to interstate commerce," he added. "The question is whether they constitute a real barrier, given the tradeoffs on the other side of the policy equation."

Policy or Protection?

In fact, the FTC said it hopes to address whether regulations represent legitimate public policy or barriers thrown up by states at the behest of traditional industries to stunt the growth of e-commerce.

"These restrictions may contribute to sound public policy, or they may constitute attempts by existing industries to forestall the entry of Internet competitors and impede new forms of competition," according to the agency.

The wine industry -- long a focal point for debate -- is among those to be examined. Yahoo! (Nasdaq: YHOO) announced last month that it would begin selling wine on its site, and eBay (Nasdaq: EBAY) already allows wine auctions, although buyers in some states are unable to complete such transactions.

Real estate, which has already been the focus of a bitter antitrust battle involving Homestore.com (Nasdaq: HOMS), also will be examined, as will automobile sales , online education, healthcare, pharmaceutical sales and online casket sales.

Consumers Paying?

In a notice announcing the workshop, FTC staff cited research from the Progressive Policy Institute (PPI), which showed that while all the industries cited have seen growth in online sales, they might be prevented by state laws from reaching their full potential. Estimates that consumers are losing out on a potential $15 billion per year in savings came from the PPI as well.

The FTC noted that the industries it plans to examine constitute a large percentage of consumers' overall budgets.

"Robust competition is vital to our economy, and reducing the barriers to e-commerce dramatically could increase competition and benefit consumers," said FTC Chairman Timothy J. Muris.

R. Ted Cruz, the FTC's director of policy planning, added that e-commerce might be able to experience additional growth if "anticompetitive barriers to dynamic new forms of Internet competition can be understood and eliminated."

All Sides Heard

The FTC's workshop will consist of panels, each of which will have industry representatives from "both sides of the issue" and independent analysts or academics.

The key questions, the FTC said, will be whether states or industries themselves are moving to limit Internet use and "whether such conduct raises antitrust concerns."

The workshop will run for three days beginning October 8th at FTC headquarters in Washington, D.C.