Banfield Pet Hospital

Banfield applauds lawsuit, which charges monopolistic tactics that make identification microchips more expensive for United States Pet owners

PORTLAND, Ore. ~ Banfield, The Pet Hospital applauds the federal civil antitrust lawsuit filed late last month against Avid Identification Systems, Inc. of Norco, Calif., and Digital Angel Corp. of St. Paul, Minn., which alleges the two are participating in a monopolistic “conspiracy“ in the marketing, sale and distribution of microchips and scanners used to identify lost Pets.

“Avid’s business practices are placing at risk the lives of animals whose owners have purchased RFID (radio frequency identification) chips for the very purpose of protecting their pets,” according to the lawsuit filed by Crystal Import Corp. of Birmingham, Alabama. The microchip manufacturer filed the lawsuit Dec. 29 in U.S. District Court for the Northern District of Alabama, Southern Division.

The lawsuit seeks no less than $10 million in damages and to force Avid to make its microchip encryption code public. The lawsuit – which charges antitrust violations, unfair competition, illegal monopolization, as well as deceptive acts and practices – also seeks to enjoin the companies from making further false and misleading statements that will deceive pet owners.

The lawsuit charges that Avid has used encryption technology and conspired with Digital Angel to keep 134.2 kHz microchip technology – which is used through most of the rest of the world and endorsed by the Internal Standards Organization – out of the United States to the detriment of Pets and Pet owners. The lawsuit alleges scanners used by animal shelters and veterinarians cannot read the encrypted 125 kHz Avid microchips unless supplied with encryption algorithm – a mathematical code – from Avid. The lawsuit states that Avid has provided the code to Digital Angel, but has refused to provide it to Crystal Tag and other companies that sell ISO-compliant chips.

“There is no technological necessity, cost benefit, manufacturing advantage or public benefit from Avid’s use of this encryption technology. Avid’s encryption of its chips is intended solely to exclude competitors and prospective competitors,” the lawsuit states.

“The conspiracy has resulted in the exclusion of competitors in these markets and the suppression of and destruction of competition which has created artificially inflated prices, approximately 100 percent higher than prices in other markets for the same or comparable products,” the lawsuit states. “Digital Angel and Avid have entered into agreements with each other to carve up and to preserve for themselves the U.S. RFID chip and reader market; to artificially inflate prices and exclude competitors’ attempts to sell its ISO-compliant chips and readers.”

“Avid’s statements to the industry, the marketplace and the press that the ISO-compliant 134.2 kHz microchips are unsafe or hazardous for pets are untrue, misleading and confusing to customers. Indeed, both Avid and Digital Angel sell and market ISO-compliant chips and readers in Canada and throughout Europe,” according to the filing.

According to the lawsuit, Avid’s statements that 125 kHz Avid microchips are the U.S. standard are false; no industry or government task force endorsed the Avid/Digital Angel systems as the standard and "the American National Standards Institute (`ANSI`), the standards-setting body in the United States, in 1996, adopted the 134.2 kHz standard and related protocols created by the International Standards Organization."

“Avid has willfully and wrongfully maintained its monopoly power through anti-competitive and exclusionary behavior,” according to the lawsuit. “Avid has intentionally encrypted its chips for the sole purpose of preserving and increasing its monopoly power, creating impenetrable barriers to entry by other competitors in the relevant market and to otherwise protect and preserve its monopoly power.”

For more information about the current state of microchips in the United States, visit the Coalition for Reuniting Pets and Families, online at www.readallchips.com.

Founded in Portland, Oregon, in 1955, Banfield has provided fifty years of quality care. Now a practice with more than 1000 veterinarians and more than 400 Banfield hospitals across the U.S., the U.K. and Mexico, Banfield helps extend the lives of more than 3.5 million Pets each year.

Banfield’s veterinarians are committed to giving Pets the same quality of care their human family members receive. Our hospitals offer a full-range of comprehensive, state-of-the-art medical services, computerized medical records, Pet preventive care plans and extended operating hours. Banfield is the only veterinary practice in the world with an extensive quality assurance program, better in many ways than those in human healthcare, and already fully implemented.