Amazon Scores Victory with Dismissal of Antitrust Lawsuit
A District of Columbia court dismissed an antitrust lawsuit against Amazon, granting the online retail giant a victory. The lawsuit accused Amazon of violating antitrust laws. The suit claims that Amazon bars third-party sellers on its platform from offering better deals on their products elsewhere. The lawsuit further alleged this anticompetitive behavior was harmful to consumers.
Judge Hiram Puig-Lugo of the Superior Court of the District of Columbia dismissed the lawsuit in March 2022. Washington D.C. attorney general Karl Racine filed the complaint last year. Mr. Racine’s office is considering filing an appeal.
“We believe that the Superior Court got this wrong, and its oral ruling did not seem to consider the detailed allegations in the complaint, the full scope of the anticompetitive agreements, the extensive briefing, and a recent decision of a federal court to allow a nearly identical lawsuit to move forward,” stated a spokeswoman for the D.C. attorney general.
Mr. Racine claims that Amazon’s policy violates antitrust laws because it is anticompetitive and could cause platforms that compete with Amazon to hike up prices for a given product. The D.C. attorney general’s sentiment is that Amazon is abusing its market-leading position to maximize its profits at the expense of third-party sellers and consumers.
“We are considering our legal options and we’ll continue fighting to develop reasoned antitrust jurisprudence in our local courts and to hold Amazon accountable for using its concentrated power to unfairly tilt the playing field in its favor,” a spokeswomen for the D.C. attorney general commented.
Amazon stated that it crafted its policies with the intention of keeping prices low. The dismissal of the D.C. lawsuit marks one legal victory for Amazon. The company has been facing multiple antitrust lawsuits at both the state and federal level.
Amazon Claims its Fair Pricing Policy Benefits Consumers
In its October 2021 motion to dismiss, Amazon asserted that it intended its business practices to be favorable to consumers. “One of Amazon’s core business objectives in serving its customers is to have a reputation for low prices, and Amazon works constantly to maintain that reputation by offering competitively priced products in its store. The District’s case, if allowed to proceed, would undermine this pro-consumer approach.”
The retail company implemented an “Amazon Marketplace Fair Pricing Policy” in 2019. It permits sellers to set their own prices. Amazon said it designed the Fair Pricing Policy to protect consumers from being overcharged. Amazon also monitors prices on other websites for a given product. If sellers list a product on Amazon for a higher price than on other platforms, Amazon might not feature the seller’s offer. Other factors that Amazon weighs when considering whether to feature a product include delivery speed and the seller’s past reputation.
The D.C. attorney general believes the Fair Pricing Policy is harmful to consumers. His position is that it violates the antitrust laws because it dissuades sellers from offering lower prices on other websites. This is despite an interest in listing their products elsewhere.
Mr. Racine’s office asserted that Amazon “has made online shopping more expensive for consumers through its anticompetitive agreements that prevent sellers from offering lower prices on and to competing online marketplaces. These agreements curtail competition, resulting in higher prices, lower innovation and fewer choices for consumers.”
Amazon’s Other Antitrust Lawsuits
Amazon recently scored another antitrust victory when the U.S. Federal Trade Commission indicated that it would not challenge Amazon’s acquisition of MGM Studios on antitrust grounds. The decision has been a setback for the FTC’s Chairwoman Lina Khan. She has been attempting to push a tough antitrust agenda.
The antitrust challenges to Amazon’s acquisition of MGM Studios failed based on the fact that Amazon and MGM are not major competitors. Although Amazon owns Amazon Studios, the company’s primary focus is on the online retail space.
U.S. enforcement officials tend to view so-called vertical mergers favorably. Vertical mergers involve the combination of two companies that support a common product or service at different stages of the supply chain. Antitrust officials blessed a similar type of vertical merger case involving AT&T’s acquisition of Time Warner in 2018.
In the European Union, competitor regulators have launched an antitrust investigation to determine whether Amazon misuses sensitive personal data from independent retailers to give itself a competitive advantage. The EU’s Commissioner for Competition Margrethe Vestager stated that she is taking a close look at Amazon’s dual role as a marketplace and a retailer. In particular, the EU will be assessing whether Amazon is using accumulated seller marketplace data to suppress competition.