FTC & 17 States Sue Amazon Over Antitrust Laws - Modern Distribution Management

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FTC & 17 States Sue Amazon Over Antitrust Laws

Several states and the federal agency claimed that Amazon's anti-discounting practices punished merchants for offering lower prices elsewhere, in violation of antitrust laws.

Online retail giant Amazon is being sued by the Federal Trade Commission and 17 states over allegations that it has monopoly power to drive prices artificially high, lock sellers into its platform, and harm its competitors.

It had been anticipated for months that the FTC would file the lawsuit in Seattle federal court, marking an important step in enforcing antitrust law under the Biden administration, according to a report from the Wall Street Journal.

In the lawsuit, Amazon is accused of violating antitrust laws by using anti-discounting measures to punish merchants for offering lower prices elsewhere.

Amazon Prime, the subscription program whose perks include faster shipping times, requires sellers to use its logistics services if they want their goods to appear in Amazon Prime. This “tying,” according to the complaint, “restricts sellers’ choices” and “reduces Amazon’s rivals’ product selection,” according to the WSJ report.

In addition, the FTC said that sellers feel they require Amazon’s services in order to succeed on the site, including advertising.

Amazon has responded in a blog written by David Zapolsky, Senior Vice President, Global Public Policy & General Counsel. In his blog, Zapolsky says the FTC’s lawsuit against would lead to higher prices and lower deliveries for consumers, and would hurt businesses.

“We respect the role the FTC has historically played in protecting consumers and promoting competition,” he wrote. “Unfortunately, it appears the current FTC is radically departing from that approach, filing a misguided lawsuit against Amazon that would, if successful, force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store — such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient.”

Zapolsky added, “The FTC’s complaint alleges that our pricing practices, our Fulfillment by Amazon offering, and Amazon Prime are anticompetitive. In so doing, the lawsuit reveals the Commission’s fundamental misunderstanding of retail.”

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