Blowout Countersuing Upper Deck Over Distribution Policy

Frontline Collectibles, the parent company of online trading card retailer Blowout Cards, filed suit against The Upper Deck Company on Wednesday, accusing the California manufacturer of intentionally harming its business and hurting collectors who want to shop around for the best prices.

Frontline/Blowout is asking for compensatory and other damages for violations of the Sherman Act, Clayton Act, Cartwright Act as well as unfair competition and tortious interference with prospective business advantage.  The company has hired Venable, a law firm with offices on the west coast, to represent it in court.

Upper Deck and Blowout have been at odds at least since April, when Upper Deck, under pressure from card shop owners and others, decided to limit the sale of its products to ‘Certified Diamond Dealers’ who must maintain a permanent retail location.  Only a limited number of those dealers are authorized to sell the company’s cards online.

Blowout, which for several years has managed to acquire products through a variety of channels and sold unopened boxes significantly cheaper than other sellers almost as soon as they hit the market, says it wasn’t allowed to participate in the Certified Diamond Dealer program.  Blowout publicly criticized Upper Deck’s move and threatened anti-trust action.  Just a few weeks later, Upper Deck filed papers asking a judge to declare its new policies legal. Upper Deck maintains that it is protecting the interests of its customers by keeping a handle on who’s selling what.

The 18-page counterclaim and suit, filed in a Los Angeles district court and obtained by Sports Collectors Daily, is a response to Upper Deck’s own legal maneuvers.  After the surprise complaint was filed last month, Loudon, Va.,-based  Blowout was given an extended period of time to respond.  That response, due Wednesday, came in the form of a counterclaim. 

The suit cites “Upper Deck’s anti-competitive activities that have harmed, and continue to harm, competition for the sale of hobby sports trading cards.”  Blowout claims it has suffered “significant financial losses” because of its current difficulty providing and selling Upper Deck products to its customers.

“Upper Deck has engaged in a scheme to violate the antitrust laws by maintaining and extending its market power through anticompetitive means and by artificially manipulating prices,” it reads.  Blowout claims Upper Deck’s policy has “harmed competition and resulted in inflated prices of Upper Deck products to the detriment of end consumers.”

Card shop owUpper Deck Companyners and online retailers have been vocal about the impact price cutting has had on their businesses, but Fish claims he has now become the victim in a campaign by Upper Deck to “maintain and extend” its monopoly power.

“I didn’t want to do this,” he said Wednesday night while mulling the expense of maintaining a legal team.  “But I have to do this to protect my business.”

In the suit, Blowout claims prices of Upper Deck products have been artificially raised because of the clampdown on competition.  Blowout also alleges that Upper Deck is practicing “selective enforcement” of its Certified Diamond Dealers program, citing a Virginia show earlier this month when it claims one of those dealers sold current Upper Deck products to an unauthorized dealer, a violation of the Certified Dealer Agreement.

Blowout claims actions by Upper Deck in the fall of 2009 were in violation of the Sherman Antitrust Act, when it says the company forced it to purchase unpopular UDX Baseball boxes if it wanted to sell the much sought after 2009-10 Upper Deck Exquisite Basketball.  “Tying products” is a practice Blowout says was standard practice for the card company.

Upper Deck announced this week that its redemption card giveaway program at the upcoming National Sports Collectors Convention would be restricted to collectors who purchased its products at the Certified Dealers who were set up at the show.  Collectors who purchase five packs of specified Upper Deck card packs from Certified Diamond Dealers are to receive a voucher they can bring to the Upper Deck booth to receive one of four different 2011 National event-exclusive, five-card packs.  Fish’s customers wouldn’t be able to participate in the giveaway if they bought from him at the show.

“This will be the first year in the history of the National I believe that a card manufacturer will dictate where collectors must buy  from in order to participate in a redemption program,” he said.

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