The Federal Trade Commission and 17 state attorneys general have filed an antitrust lawsuit against Amazon, alleging the online giant monopolizes the retail market with exclusionary anti-discounting conduct that stifles price competition.
The federal complaint, filed in the Western District of Washington in Seattle, seeks a permanent injunction that prohibits Amazon from engaging in the alleged unlawful conduct. Most federal antitrust lawsuits are filed in the D.C. Circuit, and all seven of the active judges in the Seattle district were appointed by President Joe Biden.
“Amazon does not let shoppers subscribe only to the unlimited shipping 17 component of Prime,” the complaint states. “Amazon's restrictive strategy of offering Prime services only on an all-or-nothing basis means that shoppers who want any of those services must effectively buy all of them and maintain a full Prime subscription.”
Amazon has maintained a market share of greater than 66 percent of marketplace sales, as measured by Gross Merchandise Value, across all tracked marketplaces since at least 2018, and that share grew to more than 71 percent by 2022, according to Bank of America Global Research.
In 2021, sales by Amazon online U.S. Marketplace sellers accounted for an estimated $226 billion in GMV, which is more than five times the estimated amount sold by sellers on eBay.
The alleged unlawful conduct also includes coercing sellers to use Amazon’s Fulfillment Service.
However, Amazon defended its challenged practices as a way to spur competition and innovation across the retail industry.
“The practices have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” said David Zapolsky, senior vice president of Amazon Global Public Policy & General Counsel. “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do.”
Attorneys general from Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin have joined the FTC lawsuit.
“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them," FTC Chairwoman Lina M. Khan said in a prepared statement. "Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
As previously reported by Legal Newsline, Khan laid the groundwork for the long-awaited lawsuit with the help of a wave of publicity financed by some of the deepest pockets in progressive politics.
The FTC alleges that Amazon’s anticompetitive conduct occurs in the online superstore market that serves shoppers and the online marketplace services purchased by sellers.
But Amazon contends the facts and the law FTC presents are wrong.
"We look forward to making that case in court," Zapolsky added. "Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition."