Yesterday I testified before the Maryland General Assembly to oppose HB 114. It’s a bad bill for consumers and online companies, and another iteration of the continuing war that traditional retailers have waged against e-commerce for the past few years. Last year NetChoice testified before Congress to oppose legislation that would would give retailers the power to force online marketplaces to interrogate their own customers about how they obtained items listed for sale.
HB 114 would require Maryland businesses and residents selling cosmetics, medicines, baby food and infant formula via an Internet auctions to notify the Department of Health & Mental Hygiene at least seven days prior to the auction. The bill applies only to sales using Internet auctions, not fixed-price format, and not newspaper classified ads. That right there makes you wonder.
The bill has been introduced under the theory of product safety. Safeway, Target, and the state retailers association all trumped up the dangers of selling baby food and infant formula online without citing any sort of actual harm. Or at least harm that is disproportionate to what exists at the physical store retail level.
There was also a lot of desperate hyperbole. A representative from Mars supermarkets (a Maryland chain) asserted that Internet auctions fund heroin addiction! Yes, testifying before state legislatures can be fun!
When you have bill proponents demonizing the Internet, it’s easy to see that the bill is about competition prevention. Namely, to prevent Internet auction sites from benefiting Maryland consumers and helping businesses compete with traditional retailers in the sale of food and drug items.
Getting back to the window dressing of public health, if the bill’s proponents were truly concerned about consumer safety, they would advocate wider regulation on the sale of these consumer goods beyond just auctions. After all, flea markets, websites with fixed price listings, and newspaper classifieds all sell these same products.
A surprisingly large number of people and businesses earn a lot of money through online platforms like eBay and Overstock.com. Particularly for inventory that is about to expire, online auctions are a great way to get the best price in a short time period. With its 7 day waiting period, HB 114 would make it almost impossible for small businesses, distributors, and wholesalers to recover as much as they can on their investment in aging inventory.