Through the workshop, the Commission expects to improve the understanding of the actual impact of these possible restrictions upon competition and consumers, and to hear views from a wide variety of perspectives. Expert opinion and empirical data concerning the costs, benefits, consumer and public policy justifications, and direct and indirect effects of possible restrictions are welcome from all interested parties.
Wine Sales: Wine is a good example of how the Internet can permit fundamentally different business models to flourish. Through the Internet, many smaller vineyards, with limited distribution networks, can market their wines to consumers around the country. Many states, however, limit or prohibit direct wine sales over the Internet, contending that such limits further the state's interests in advancing the Twenty-First Amendment's important public policy goal of temperance, in helping to prevent alcohol sales to minors, and in facilitating tax collection. Lawsuits are pending in at least six states regarding the direct shipment of wine.
Cyber-Charter Schools:Cyber-charter schools may offer school districts and students a variety of potential benefits. School districts potentially can reduce overcrowding and cut costs, while students potentially can receive broader educational opportunities and more challenging courses. On the other hand, some states and school districts have expressed concern that cyber-charter schools may undermine traditional public schools.
Contact Lenses: Some studies suggest that Internet sellers may provide consumers with substantial cost savings and greater convenience by delivering lenses to the consumer's door, while others believe that online sales of contact lenses may threaten consumer health. In March 2002, the FTC filed a staff comment before the Connecticut Board of Examiners for Opticians, which is currently considering whether to require stand-alone sellers of replacement contacts to obtain Connecticut optician and optical establishment licenses.
Automobiles: Automobiles represent one of the biggest investments for many households, both in terms of their purchase price and their importance to a family's daily life. A group of Yale University economists have concluded that consumers who use Internet purchase referral services to buy a car pay, on average, two percent less than consumers who do not.(1) On the other hand, many dealers argue that they have legitimate reasons for concern about manufacturer Internet sales. They argue that franchise laws protect consumers against unscrupulous manufacturers, and that Internet sales unfairly undermine their businesses by letting online sellers "free ride" off the services provided by franchised dealers.
Caskets: Because mark-ups on caskets can be significant, online casket purchases potentially can save consumers substantial sums of money. Additionally, online casket sellers also may be able to offer consumers a greater variety of choices, such as individualized caskets. Some states, however, require that casket purchases be made only through a licensed funeral director at a funeral home, in order to protect consumers from fraud and abuse.
Online Legal Services: The Internet has the potential to deliver legal services in at least two ways, each of which raises its own set of issues. First, the Internet offers access to basic legal advice to people who otherwise would not be willing or able to pay for legal services. For instance, many companies are offering services like online wills at a relatively low cost, which raises the issue of the unauthorized practice of law. Second, the Internet likely will expand the existing practice of lawyers offering legal services to clients who are in other jurisdictions, which raises the issue of multijurisdictional practice. The courts, and the Bar as a whole, are just beginning to grapple with these issues.
Telemedicine and Online Pharmaceutical Sales: The Internet offers consumers potential cost savings and greater access to specialized care. For example, online prescription drug purchases potentially could lower prices, and telemedicine could allow patients to access portable medical equipment and digital imaging technology even if they lack ready access to a full-service hospital. On the other hand, online health care raises serious consumer protection issues. Some medical professionals and regulators argue that online pharmacy sales are particularly susceptible to abuse, and that patients might not have adequate legal remedies against out-of-state doctors who practice telemedicine.
Auctions: Internet auctions have become a cultural phenomenon, with auction sites attracting millions of participants around the country. Some businesses have even started to use auction sites as an alternate means of distributing their products. Some states, however, are considering whether to apply existing licensing requirements designed for traditional auctioneers to these Web sites. Such requirements could apply to both online auctioneers an
Real Estate / Mortgages / Financial Services: Consumers can now receive many real estate and financial services online. A number of states, however, have adopted regulations that may affect the provision of these services by online, out-of-state firms. In several states, companies must maintain an in-state office as a condition for licensing if the company makes, brokers, or services residential mortgage loans. Many of these regulations are designed to protect consumers from unscrupulous practices, but they may also have the secondary effect of insulating local businesses from wider competition.
Retailing: E-commerce retail sales continue to expand rapidly. For example, in the second quarter of 2002, retail e-commerce sales increased 24.2 percent, up to $10.2 billion, from the second quarter of 2001.(2) Nonetheless, in some instances we have seen attempts to limit e-retailing through conduct that raises antitrust issues, such as collective pressure on suppliers to limit electronic sales to consumers. This type of conduct may reflect legitimate business concern over free riding and channel conflict, but it may also raise antitrust concerns.
1. Fiona Scott Morton, Florian Zettelmeyer, and Jorge Silva-Risso, Internet Car Retailing, 49 J. Indus. Econ. 501, 502 (2001).