FOLLOW US

The Federal Trade Commission (FTC) announced that three rent-to-own operators agreed to settle the lawsuits alleging that the companies violated the federal antitrust law.

Aaron’s Inc., Buddy’s Newco LLC, and Rent-A-Car Center reached a settlement agreement, in which the rent-to-own operators consented to the FTC order requiring them to cease and desist from engaging in anti-competitive practices. The respondents also agreed to submit compliance reports to the Commission.

FTC allegations against the rent-to-own operators

In the complaints, the FTC alleged that Aaron’s, Buddy’s, and Rent-A-Center entered into anticompetitive reciprocal purchase agreements with each other and other competitors in June 2015 to May 2018.

Under these reciprocal agreements, each of the rent-to-own company swapped customer contracts in various local markets. As a result, one party to the agreement agreed to close its stores and exit a local market and the other party continues to operate its business.

The store closures probably happened due to the reciprocal purchase agreements, which reduced competition for quality and service in the remaining stores in the local market, according to the Commission.

Additionally, the FTC argued that the reciprocal purchase agreements explicitly required the selling party to stop competing within a specified territory, normally for three years.

Preventing rent-to-own operators from repeating anti-competitive practices

In a statement, FTC Bureau of Competition Director Ian Conner said, “These agreements affected consumers who already had few options for furnishing a home on a limited budget.”

He added that the FTC Orders against Aaron’s, Buddy’s, and Ren-A-Center will eliminate their reciprocal purchase agreements. It will also restore competition in the affected local market and prohibit the companies from re-engaging into this unlawful anti-competitive practice.

The FTC voted 3-2 to issue the complaint and accept the proposed Consent Order against the three rent-to-own operators.

“We believe this relief, which is tailored to both the nature of the challenged conduct and the governing law, would remedy the legal violation and prevent its recurrence,” according to FTC Chairman Joseph Simons and Commissioner Noah Joshua Phillips.

Commissioner Chopra believes the proposed settlement was inadequate

On the other hand, Commissioner Rohit Chopra disagreed. He believed that the proposed settlement was inadequate.

According to Chopra, I dissent from the Commission’s vote regarding three no-money, no-fault proposed orders with the big three major players in the rent-to-own business…While I am pleased that we have uncovered difficult-to-detect misconduct, I am concerned our remedy is insufficient, that the analytical basis of the proposed settlements is flawed, and that the Commission is doing little to deter similar misconduct by others.”