The Federal Trade Commission is suing one of the biggest online contact retailers in the U.S. for allegedly eliminating their online competitors by having them agree to bidding agreements.
According to the FTC, this all began when someone searched “1-800 Contacts,” and saw advertisements for both 1-800 Contacts and a competitor. The online retailer objected to this because of bidding agreements signed by them and their competitors.
The FTC said these agreements stemmed from lawsuits that 1-800 Contacts brought against numerous rivals, accusing them of infringing its trademarks. So, 1-800 contacts and their competitors signed these agreements, which prevented both companies from bidding for each other’s trademarked terms.
Additionally, all but one agreement required each company to use negative keywords designed to keep search engines, like Google or Bing, from displaying a company’s advertisement. What this means is if a consumer searched “1-800 Contacts,” negative keywords would not allow ads from 1-800 Contacts’ competitors from appearing on your screen.
FTC’s complaint states 1-800 contacts entered into bidding agreements with at least 14 competing online contact lens retailers.
The federal agency claims these agreements are unfair since users can’t compare prices between different retailers, which FTC claims eliminates market competition. This means customers may be paying higher retail prices.
The administrative trial is scheduled to begin on April 11, 2017.