SEATTLE (Legal Newsline) - The Federal Trade Commission’s antitrust suit against Amazon attacks sales practices that are the “very essence of competition,” the online retailer said in a motion to dismiss the government’s case.
Matching the lowest retail prices anywhere and featuring the best deals in its “Buy Box” benefit consumers and save them time shopping, Amazon said in a fiery response to the FTC suit pending in federal court in Washington State. The government fails to identify any product categories or specific items that cost more because of Amazon’s tactics, the company said, dooming the FTC’s case under legal precedents requiring plaintiffs to state with particularity facts supporting their claims.
Instead the government “implausibly, and illogically, assumes that Amazon’s efforts to keep featured prices low on Amazon somehow raised consumer prices across the whole economy,” the company said.
Even FTC Chair Lina Khan has admitted she buys diapers on Amazon and in her career-making 2017 academic article attacking Amazon’s practices, she acknowledged it would be necessary to “revise antitrust law” to go after Amazon.
“Six years later, antitrust law remains unchanged, but the FTC has sued Amazon under the Sherman Act anyway,” Amazon said.
The FTC claims Amazon has cowed the entire retail sector into charging higher prices by threatening the 560,000 merchants who sell goods on its site with punishment if they offer lower prices anywhere else. The government alleges a variety of illegal tactics including forcing third-party sellers to use its fulfillment and advertising services to increasing their ranking in search results.
Those vendors then pass through Amazon’s higher costs to consumers, the government says. Amazon attacked those claims as fanciful.
First, the FTC says Amazon has monopolized the “online superstore” market, defined as the online stores of Amazon, Target, Walmart and perhaps a few more unspecified retailers. Amazon said it was implausible to claim that consumers don’t shop for lower-priced TVs on Bestbuy.com because it doesn’t also offer shoes and cosmetics, and even less plausible they wouldn’t buy a cheaper TV in a bricks-and-mortar store.
Amazon also repeatedly undermined Khan’s attempts to redefine antitrust law away from its focus on consumer welfare, saying the U.S. Supreme Court has emphatically stated antitrust law doesn’t serve to protect competitors against price cuts that hurt their profits. Under the government’s theory, the company said, “Amazon would be required to feature what it knows are bad deals,” the company said.
While the Sherman Act does prohibit predatory pricing, or pricing below cost in hopes of driving competitors out of a market, the FTC claims Amazon is holding prices higher than they otherwise would be by forcing third-party sellers to pass through its inflated fulfillment and advertising costs. The FTC also claims Amazon has grabbed so much of the shipping and fulfillment business that competitors can’t reach sufficient scale to be efficient or are scared away from the market entirely.
“It defies common sense to suggest that Amazon’s use of the Prime badge could have marginalized retail heavyweights like Walmart and Target or delivery incumbents like UPS, FedEx, and the U.S. Postal Service—some of which Amazon uses to deliver orders today—let alone any other entity,” Amazon said.
Finally, Amazon challenged the FTC’s attempt to use Section 5 of the Sherman Act, which proscribes “unfair” tactics, saying a federal district court can’t define what “unfair” is under that law. The FTC in 2015 formally aligned Section 5 with the Sherman Act, but reversed course under Khan and said a variety of methods may be “unfair” without violating the Sherman Act. Only the FTC can determine, through policymaking and its own administrative process, the meaning of “unfair,” Amazon said.