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The Federal Trade Commission (FTC) and 17 state attorneys have filed a lawsuit against Amazon alleging the retailer is “a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power".
The case claims that Amazon’s “ongoing pattern of illegal conduct blocks competition, allowing it to wield monopoly power to inflate prices, degrade quality, and stifle innovation for consumers and businesses".
It alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. It claims the imposition of anti-discounting measures prohibit merchants who sell products on Amazon from offering lower prices elsewhere.
Moreover, Amazon is also accused of requiring merchants to use the company’s delivery and fulfilment system in order to qualify for Prime, and that Amazon prioritises the company’s in-house line of products over those of third parties. The injunction sought would force Amazon to stop these practices, according to the FTC and states.
FTC chair Lina M Khan said: “Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service.”
John Newman, deputy director of the FTC’s Bureau of Competition, added: “We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swathe of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers. Seldom in the history of US antitrust law has one case had the potential to do so much good for so many people."
Amazon has called the lawsuit “misguided”. David Zapolsky, senior vice-president of global public policy and general counsel, said: “The FTC’s case alleges that our practice of only highlighting competitively priced offers and our practice of matching low prices offered by other retailers somehow lead to higher prices. But that’s not how competition works.
“The FTC has it backwards and if they were successful in this lawsuit, the result would be anticompetitive and anti-consumer because we’d have to stop many of the things we do to offer and highlight low prices—a perverse result that would be directly opposed to the goals of antitrust law.”
The case can be read in full here, and Amazon’s full response here.