FTC's Amazon complaint zeros in on seller prices, logistics

[September 28, 2023]  WASHINGTON (Reuters) -The U.S. Federal Trade Commission filed a lawsuit against Amazon.com that accused the online retail giant of overcharging customers and independent sellers on its platforms as the $1 trillion company sought to illegally maintain monopoly power.  

The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France, January 5, 2023. REUTERS/Pascal Rossignol/File Photo

These are the specific allegations included in the FTC's 172-page complaint:

ONLINE SUPERSTORE, SERVICES MONOPOLIES

*The agency alleged that Amazon had a monopoly in an online superstore market. In 2021, Amazon had 77% of the market, Walmart had 13% and Target 2%.

*The agency also said that Amazon had a monopoly in the online marketplace for services, where Amazon has more than 70% of the market. The FTC said that more than 160 million people in the United States visit Amazon's website each month.

PUNISHES SELLERS FOR LOWER PRICES ELSEWHERE

* The complaint alleged Amazon uses a sophisticated network of web crawlers that identify which of its sellers offer their products more cheaply on other platforms. Amazon allegedly punishes those sellers, who make up about 60% of Amazon's sales, by making them harder to find on its platform.

"Because Amazon's anti-discounting conduct punishes sellers who offer lower prices at rival online stores with lower fees, many sellers set their price on Amazon- high fees and all - as the price floor across the internet," the FTC said in the complaint.

REQUIRES USING AMAZON LOGISTICS

* Amazon requires sellers under Amazon's Prime feature to use the company's logistics and delivery services even though many would allegedly prefer to use a cheaper service or one that would also service customers from other platforms where they sell.

CHARGES HIGH FEES

*The complaint alleges Amazon raised average fulfillment fees to sellers about 30% between 2020 and 2022, as well as requiring them to pay for referrals and advertising. The FTC alleged that between sellers paying for search placement, fulfillment and other charges that Amazon takes nearly half of what sellers make on their sales.

MONITORING PRICES

* Amazon used the Project Nessie pricing system as an unfair method of competition. A description of Project Nessie was heavily redacted. An Amazon blog described it as "a system used to monitor spikes or trends on Amazon.com."

(Reporting by Diane Bartz; Editing by Jamie Freed)

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