Staples, HP Sued For Not Selling HP Compatible Ink
from the antitrust? dept
Back in February, we talked about how HP was pressuring retailers not to stock generic brand inkjet printer ink cartridge refills, though it appeared that Staples was the only company who agreed to the deal. This wasn't surprising -- as the margins on printer ink for companies like HP are astronomical, and the company has been doing everything it can possibly think of to stop anyone from selling competitive ink, including filing bogus patent lawsuits. It took some time, but someone is now trying to file a class action lawsuit against HP for the deal it made with Staples, who is also included. The lawsuit claims that the deal is an antitrust violation, but that seems like a huge stretch. While we agree that it's somewhat sleazy, it's hard to see how this is a serious antitrust violation. There are plenty of places, online and off, where you can buy offbrand ink cartridges (or have existing cartridges refilled). If Staples wants to cede all that business to others, that's its (bad) decision. However, no one is forcing people to shop at Staples, and customers should do a little research before realizing that there are much better options than what Staples is stocking on its shelves.
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Filed Under: antitrust, printer ink
Companies: hp, staples
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Plausible Antitrust Case
Tying agreements, in fact, are specifically prohibited by Section 3 of the Clayton Act.
All it takes is one activist FTC bureaucrat or a sympathetic civil jury.
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Re: Plausible Antitrust Case
How is this restraint of trade? Who's restrained?
Tying agreements, in fact, are specifically prohibited by Section 3 of the Clayton Act.
And, yes, I've discussed tying agreements as well -- and I have a problem with them when they're with *all* retailers. In other words, when it's a case that the manufacturer is also setting the retail price. Then you can make an antitrust argument. But, it seems silly to make an antitrust argument here when the market can decide for itself and recognize that they just shouldn't shop at Staples.
All it takes is one activist FTC bureaucrat or a sympathetic civil jury.
Indeed. Doesn't make it right, though.
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Re: Re: Plausible Antitrust Case
Where did I say it does?
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Re: Re: Plausible Antitrust Case
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Re: Re: Re: Re: Plausible Antitrust Case
"If the market wants the excluded product they will find ways to get it..."
- not if the market has no idea the excluded product even exists, and that's HP's ultimate goal. I'm even surprised by how many people I work with who are unaware of the alternatives to $8000/gal HP-branded ink...
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Re: Re: Re: Plausible Antitrust Case
p.s. there are 2 Walgreens in missoula. they sell ink and some offer refills. check it out.
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Re: Re: Re: Re: Plausible Antitrust Case
Well I'm in Billings, MT and sometimes I would rather go out and buy ink rather than wait for it to arrive by mail. But, we don't have a Staples and have many other stores to choose from.
p.s. there are 2 Walgreens in missoula. they sell ink and some offer refills. check it out.
The Walgreens here don't stock ink. It's just a pharmacy and some miscellaneous items. But Walmart does and I know they have in Missoula. And an Office Max, Office Depot, and Cartridge World, so the last guy was being misleading. Missoula is not a small city in MT.
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Re: Re: Re: Re: Re: Plausible Antitrust Case
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Did those deals fall through? Office Max was suppose to be going on the other side of the Southgate mall and Office Depot was building a store on Reserve somewhere.
But you do have a Cartridge World and Walmart which stocks generic inks, so Staples is not the only option. I know Target and Costco stock ink to, but I don't think they do generics.
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Re: Re: Re: Re: Plausible Antitrust Case
Suck on that anonymous jerk
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Re: Re: Re: Plausible Antitrust Case
Every printer I've ever seen gives you plenty of warning before ink runs out. A prudent user will have a cartridge in the desk drawer before the ink runs out.
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Re: Re: Re: Re: Plausible Antitrust Case
Every printer I've ever seen gives you plenty of warning before ink runs out. A prudent user will have a cartridge in the desk drawer before the ink runs out.
Just because you can buy something online doesn't mean stores should force it to be your only option. I run lots of errands and if I'm out and about I would like to pick up what I need. I usually only order gifts online. But I agree with Mike on this one, let Staples do what it will and ruin their own profits. The courts shouldn't be deciding this one.
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Re: Re: Plausible Antitrust Case
Restraint of trade in that consumers aren't able to choose between competing products. One could argue that you don't have to shop at Staples - just go somewhere else. But HP's goal was (is) to remove that competition from all stores. So far only Staples has gone along.
I'm not a lawyer, so clearly there's a flaw in my common-sense approach :)
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Interesting discussion about it at Digg
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Antitrust? How about just shopping somewhere else
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Re: Antitrust? How about just shopping somewhere
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Other places not so useful
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important distiinction
The problem, and the anti-trust issue, is that a manufacturer of a product is trying to coerce stores into not selling a competing product.
This is a no-brainer to me.
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Re: important distiinction
So? That is the stores decision to make (even though it is kind of a dumb move) and the anti-trust issue I think won't go through simply because it is a generic product, not a competing product.
It is like pharmacies; some refuse to stock generic drugs, but they will stock different kinds of drugs that do the same thing (like Ambien and Lunesta). Should they be sued with an anti-trust for not giving the generic drug companies a chance?
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Re: Re: important distiinction
Again, if the store made the decision 100% on their own then they should rightfully suffer.
But this has been going on for years: HP has tried everything to put the refillers out of business. FUD about lawsuits, patent infringement, etc... just to prevent these competing products from being sold.
HP sells inkjet printers at a loss. I.E. the printer costs more to make than they sell it for, making up the loss in inflated ink sales. Gillette does the same: give away razor handles but charge astronimically for the replacement blades. Game-console mfgrs also sell their consoles at a loss and expect to make up that revenue from software sales. In those examples, the "consumables" have proprietary and legal aspects that protect them (patented connectors for blades and DMCA/encryption for software). HP tried the lawsuit tactic, and if I remember correctly were moderately successful against clone carts. But since their patents don't protect against using a syringe to refill their carts they tried the firmware lockouts to prevent refills. This was slapped down. Now it's time for the back-room deal with retailers... Anything to protect the cash cow that is $8000 PER GALLON ink. If you filled an Olympic-size swimming pool with ink from HP or Lexmark inkjet cartridges, it would cost $5.9 billion.
An earlier post mentioned that HP ink has recently come down in price. Why is that? Competition! If they had succeeded in suppressing the competition (as they have at Staples), would those prices have dropped? Odds are, they would have RISEN.
It might even go deeper. Staples might not have been coerced, but agreed to go along with HP in order to protect margins. That would be collusion to price-fix IMO.
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Re: Re: important distiinction
If they colluded with the drug companies to exclude generics in order to maintain artificial profits, then ABSOLUTELY YES.
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Re: Re: Re: important distiinction
You really have no idea how pharmacies work. Of COURSE the drug reps offer deals and promotions to convince the pharmacies to only sell their drugs and not generics. It is not against the law for vendors to make deals with sellers and demand that only their products are available to customers (go to any restaurant or sports arena, they serve coke or pepsi products but rarely both). Walmart makes these sorts of deals all the time.
HP is not doing anything illegal by offering companies compensation in return for being their exclusive dealer, which is why I bet this lawsuit gets thrown out by the courts. What about the Apple/AT&T deal? No one is suing them for antitrust violations. I just want to be clear though, Staples is making a stupid move (unless of course they get major compensation for doing so).
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Re: Re: Re: Re: important distiinction
OVERVIEW OF FTC ANTITRUST ACTIONS IN PHARMACEUTICAL SERVICES AND PRODUCTS
http://www.ftc.gov/bc/0608rxupdate.pdf
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simple for hp
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Cost of a printer
It literally costs less to buy a cheap printer than it does to buy a month's supply of ink.
Think about this for a minute.
How many people would just throw out their printer and buy a new one, rather then spend more money on cartridges?
How did our society get to the point where it's more economical to just buy a new piece of hardware instead of repairing the old one?
And what happens to all these printers that are thrown out? Do people donate them to Goodwill? Does Goodwill know to simply replace the cartridges or do people drop off the printer saying "It don't print no more"?
Do people throw the printers in the trash? Are landfills filling up with perfectly good printers that simply need new ink?
It's kind of like Microsoft's attitude with each Windows upgrade: if your peripherals don't work with the latest version, just throw it out and get a new one that's "certified" to work.
It's not their fault that your "old" printer doesn't work with Vista: you shouldn't be using a printer made in 2006 anyway.
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To prove my point, I just replaced my cartridge with the same exact store bought Cartridge City brand #27. Now the printer works again. If the cartridge #27 is the same, but is not compatible, why then does my printer now print? This is the same trick they pulled with the low ink message.
The HP OfficeJet 5600 All-In-Series user guide describes the extent of the limited warranty. Hewlett-Packard (HP) warrants to the end-user customer that the HP warranty does not cover (3) “any other problems, including those that arise as a result of….
b. “…or supplies not provided or supported by HP”
c. “..operation outside of the products specification”
d. “….unauthorized modification or misuse.”
(9) tells me HP products may contain remanufactured parts, components, or materials equivalent to new in performance.
The preceding warranty gives HP the right to shut down my printer and infringe on my right to the free use and choice in my preference of using a remanufactured cartridge. To close down Cartridge City 100% satisfaction guarantee of their product, and to discourage and destroy competition. What gives HP the right, after 54 days of cartridge use, to then tell me my “printer cartridge not compatible…” It’s not a low ink issue? You see it’s not the cartridge, but it is, continues, and will always be,… the INK! You saw what the warranty does not cover. But shutting down my computer, because the use of outside sources of remanufactured cartridges, are ink supplies “..not provided or supported by HP.”
What is being said is, all other sources of recycled ink cartridges are not of HP standards, and will not allow their printers to operate, or give the consumer the free choice, to decide the ink quality choices in the use by a purchaser of an HP printer. In a 6/22/2006 Chicago Tribune article, “HP warns, Walgreens, Office Max on ink sales.” HP senior vice-president Pradeep Jotwani Stated, “They are using an ink that has specific chemicals or certain chemicals at certain levels that violate our formula for ink.” In other words, the world should run on only ink formulated on HP principals of what ink should be. That warning was to suppress, monopolize, or attempt to monopolize, and control the use of ink. To avoid the anti-trust issue, after a printer programmed predetermined time, you’ll receive a message, in order to shut down your printer, “printer cartridge not compatible…”
From the HP cartridge informational inserts, “HP recycling program. HP offers an increasing number of product return and recycling programs in many countries/regions, as well as partnering with some of the largest electronic recycling centers throughout the world. HP also conserves resources by refurbishing and reselling some of it’s most popular products. It also states, “HP limited warranty… warranty does not cover empty or refilled products, or products that have been misused or tampered with.”
O.K., I understand that. HP does not cover refilled products. So that I also understand, the warranty is on the HP ink cartridge, as noted by the warranty date. I can understand a cartridge being defective. But I don’t understand the refilled statement? If I purchased, or refilled an HP cartridge, I understand there is no warranty. But again why, after using my refilled remanufactured cartridge, under what specific technical conditions has HP determined after 54 days my printer cartridge not compatible?
Previously, I received a HP Newsgram. They were telling me how I should only use HP ink cartridges. “With a 98% reliability rate, you’ll enjoy a hassle-free, worry-free, experience you won’t get from refurbished or refilled ink cartridges.” In other words, suggesting to me, and others, refurbished or refilled cartridges being available, can be used on HP printers. This of course is not entirely true, and intended only to fool the unsuspecting, and naïve, from finding out the HP printers will become inoperative after a predetermined use, even when ink supply and copy quality is not the issue.
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HP - restraint of trade or interference with equipment via software sabotage
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