FTC's Amazon antitrust lawsuit faces high bar in US court -experts
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[September 27, 2023] By
Mike Scarcella
(Reuters) - The U.S. Federal Trade Commission's lawsuit accusing
Amazon.com of abusing its retail market power to stifle competition
faces hurdles in court, testing the scope of U.S. antitrust law and
posing roadblocks for the agency, legal experts said.
The U.S. consumer agency, which enforces federal antitrust law, and 17
states filed their lawsuit against Amazon in Seattle federal court on
Tuesday, asking a U.S. judge to consider an injunction and other
penalties to combat alleged unlawful conduct.
Several legal experts told Reuters that the FTC faces a high bar in
trying to show that U.S. consumers would be better off in a world
without Amazon's policies in place.
The lawsuit said Amazon has unfairly given preference to its own
products and that the company's policies punish merchants that want to
sell products for lower prices on other platforms.
Under U.S. law, the FTC has the burden to prove that Amazon is not just
a big market player with power but also that it has taken illegal steps
to acquire or maintain its dominance. The agency also must define and
prove the relevant markets, a key threshold issue.
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Antitrust lawyer David Balto, a former policy director at the FTC,
described the FTC's hard climb ahead as trying to surmount Washington
state's Mt. Rainier in tennis shoes.
"You know, it's conceivable — you could get to the top — but it's 20,000
feet and it's going to be really cold," he said.
As part of the case, Amazon will have a chance to assert pro-competitive
justifications for its alleged conduct, said antitrust lawyer Diane
Hazel of law firm Foley & Lardner. Hazel said Amazon would need to show
its reasons are "legitimate" in order to counter the FTC's claims.
Amazon's argument, said antitrust scholar Tom Cotter of the University
of Minnesota Law School, will be "We provide consumers with access to a
wide variety of goods at affordable prices quickly."
Indeed, Amazon general counsel David Zapolsky said in a statement the
challenged policies have "helped to spur competition and innovation
across the retail industry." Zapolsky said the FTC's complaint pretends
that "everyday retail competition doesn't exist."
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Amazon boxes are seen stacked for delivery in the Manhattan borough
of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo
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FTC Chair Lina Khan said in a statement Amazon used "punitive and
coercive tactics" to unlawfully maintain a monopoly.
The FTC's lawsuit is related to but broader than a series of private
consumer cases filed in recent years against Amazon that are pending
in the same U.S. federal court.
The private antitrust cases offer an early window into some of the
legal arguments Amazon could be expected to make to challenge the
FTC's lawsuit.
In one of the cases, a prospective class action challenging the
platform's pricing policies, Amazon's lawyers argued that no court
"has ever condemned a business practice that requires low prices in
a retail store for consumers."
Amazon is also fighting claims from another private civil lawsuit
that said the company has stifled competition for shipping and
fulfillment services.
U.S. District Judge Ricardo Martinez in April dismissed that
lawsuit, saying consumer plaintiffs were not buyers of logistics
services. But the court gave the consumers a chance to bring a new
case.
Martinez, an appointee of former U.S. President George W. Bush,
could be assigned to the FTC's lawsuit because the agency said
several Amazon cases pending before him were related factually and
legally to the new complaint.
Generally speaking, U.S. judges are "wary of using antitrust law to
punish low-pricing behavior," said antitrust scholar Sean Sullivan
of the University of Iowa's law school.
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Sullivan said it is not always a clear line between "good low
pricing" — based on market competition — and "bad low pricing" that
helps a company acquire or maintain market power.
(Reporting by Mike Scarcella; Editing by Leigh Jones and Muralikumar
Anantharaman)
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