Public versus Private Restraints on the Online Distribution of Contact Lenses: A Distinction with a Difference
![handle is hein.journals/jecoplcy3 and id is 335 raw text is: 2007]
PUBLIC VERSUS PRIVATE RESTRAINTS
ON THE ONLINE DISTRIBUTION OF CONTACT LENSES:
A DISTINCTION WITH A DIFFERENCE
James C. Cooper*
I. INTRODUCTION
Due to the difficulty involved with creating standardized lenses, eye
care professionals (ECPs) previously fit each pair of contact lenses a patient
purchased. As a result, consumers almost invariably purchased eye exams
and contacts in a bundle from their ECP. Beginning in the late 1980s, how-
ever, technological improvements began to eliminate the need for lenses to
be fitted individually and subsequently transformed contact lenses of the
same brand and prescription into commodities.' Now, a consumer with a
valid prescription can purchase contact lenses from an array of merchants,
including optical chains, independent ECPs, warehouse clubs, mass mer-
chandisers, and online vendors.
Since their appearance on the scene, online contact lens vendors have
faced two distinct types of foreclosure. First, some states considered laws
that would raise online contact lens sellers' costs by requiring online firms
to be licensed as optometrists or by preventing online sellers from shipping
lenses directly to consumers. The second type of restriction comes not at
the hands of the state, but rather from contact lens manufacturers them-
selves. Some manufacturers adopted policies that prevent online sellers
from distributing their lenses.
Although at first blush these two restrictions may appear to have iden-
tical effects on competition, they do not. The key distinction is that gov-
ernment-imposed restraints on competition among contact lens sellers is the
result of a political process, whereas unilaterally imposed vertical restraints
are the product of private contracting. As is widely recognized, manufac-
turers have incentives to enter into contracts that limit distribution to en-
hance interbrand competition. A voluminous body of literature pointing to
* Deputy Director, Office of Policy Planning, Federal Trade Commission. The views expressed
in the paper are the author's alone and do not represent those of the Federal Trade Commission or any
individual commissioner.
1 Contact lenses-like books and CDs-are differentiated products and specific brands compete
against one another. Once a consumer has been prescribed a certain brand of lens, however, that lens
can be treated as a commodity because it is the same regardless of where it is purchased. For example, a
Focus Toric lens of a certain prescription is identical at every location it is sold; a consumer will treat
the lens as a commodity, and if retailers are undifferentiated as well, she will purchase the lens from the
seller with the lowest price.](ViewImageLocal?handle=hein.journals/jecoplcy3&div=20&collection=journals&method=preview&ext=.png&size=3)
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Public versus Private Restraints on the Online Distribution of Contact Lenses: A Distinction with a Difference
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