French auction regulator sues to close down eBay France

The French auction regulatory authority is seeking to close down eBay France for operating an online auction without a permit, it announced Monday.

The authority accused eBay of hiding behind the status of broker to avoid giving the required legal guarantees to buyers and sellers, in breach of a July 2000 law that regulates auctioneers online and offline. It has asked the high court in Paris to order eBay to stop auction sales in France until it has the required legal authorization.

The action is completely unjustified, according to a statement from eBay, which said it has "invented another way of buying and selling" not covered by the law on auction houses.

Last month, the regulator filed suit against the online car auction site Carsat.fr seeking a similar court injunction to halt its activities, which it said were being conducted without due authorization, and warned that other online auctioneers faced similar action.

The authority has until recently shown a certain tolerance for the activities of online auctioneers, which were a still-emerging sector when it was created by the July 2000 law.

That law makes a clear distinction between the activities of online auctioneers, which have a mandate from the owner of the goods to sell them to the highest bidder, and online auction brokerages, where no third party intervenes between the buyer and the seller to complete the sale. Online auctioneers must obey the same rules as physical auction houses, in particular taking responsibility for delivering the goods to the buyer, but auction brokers are almost exempt from regulation, except where the goods sold are "cultural products" such as books, CDs or DVDs, according to the regulator.

In its annual report last year, the regulator warned that it was urgent to regulate the activities of online auction sites, where 60 percent of sellers of "cultural products" appeared to be businesses.

The regulator expressed its concern that companies operating auctions without permission did not offer the necessary protection for consumers, and warned of the risks of tax evasion or the sale of counterfeit goods.

It also called for the revision of the July 2000 law to take better account of auction companies claiming to be brokers.

Representatives of the regulator were not immediately available for comment. A spokeswoman for eBay referred to the written statement.