The Federal Trade Commission and 17 state attorneys general on Tuesday filed a much-anticipated antitrust case against Amazon, alleging the retailing giant illegally wields monopoly power to maintain higher prices, harming customers and hurting rivals.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” FTC Chair Lina Khan said in a statement. “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.”
She added, “Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
Amazon didn’t immediately respond to a request for comment.
The legal showdown comes after Amazon attorneys gave no ground in discussions last month with the FTC, both Politico and the Wall Street Journal reported. The complaint focuses on Amazon’s business practices that the FTC contends block lower prices on rival sites and compel merchants to use the e-commerce company’s logistics and advertising services.
The lawsuit alleges that Amazon is operating uncompetitively in two markets — the online superstore that most consumers are familiar with, as well as the market for online marketplace services bought by sellers.
Amazon allegedly uses anti-discounting techniques to deter online retailers from offering prices below Amazon’s. The retailer will “bury discounting sellers so far down in Amazon’s search results that they become effectively invisible,” the FTC claims.
The lawsuit also alleges that Amazon pushes sellers to use its expensive fulfillment service in exchange for obtaining “Prime” eligibility for their products, which the FTC noted is a “virtual necessity for doing business on Amazon.”
Breaking up Amazon?
Some consumer advocates applauded the lawsuit, with the Athena Coalition, a group that has advocated against Amazon’s business practices, calling for the government to “break up Amazon.”
“When a single corporation has this much power, it will always behave as a bully — it will pick winners and losers, exploit workers, raise prices on consumers, and pollute our planet,” the Athena Coalition said in an emailed statement. “Amazon cannot be allowed to write the rules in its own favor and break the law with impunity.”
The states that joined the FTC in the lawsuit are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.
Shares of Amazon fell $3.48, or 2.7%, to $127.79 in early afternoon trading.