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FTC’s Amazon antitrust lawsuit faces high bar in US court -experts

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

The U.S. Federal Trade Commission’s (FTC) complaint alleging (AMZN.O) of abusing its retail market dominance to suppress competition faces legal obstacles that, according to legal experts, test the applicability of U.S. antitrust law and provide challenges for the agency.

On Tuesday, the 17 states and the U.S. consumer agency, which upholds federal antitrust law, filed a complaint against Amazon in Seattle federal court, requesting that a U.S. judge consider an injunction and other sanctions to stop suspected illegal behavior.

According to several professionals interviewed by Reuters, the FTC will have difficulty that American customers would benefit from an absence of Amazon’s standards.

According to the complaint, Amazon has unjustly given precedence to its items and penalizes merchants who wish to offer goods for less on other marketplaces.

The FTC is required under U.S. law to establish that Amazon has engaged in illegal activity to obtain or retain its dominant position in the market, in addition to being a significant player with significant influence. Another important threshold problem is that the agency must identify and support the appropriate markets.

Former FTC policy director and antitrust attorney David Balto compared the FTC’s difficult road ahead to climbing Mt. Rainier in tennis shoes.

It’s possible, he answered, but it will be quite cold at 20,000 feet, and you might not reach the summit.

According to antitrust attorney Diane Hazel of the law firm Foley & Lardner, Amazon will have the opportunity to provide pro-competitive defenses for its alleged actions as part of the lawsuit. For Amazon to refute the FTC’s allegations, Hazel said, it would have to demonstrate that its justifications are “legitimate.”

Antitrust expert Tom Cotter of the University of Minnesota Law School predicted that Amazon’s defense would be, “We provide consumers with access to a wide variety of goods at affordable prices quickly.”

Indeed, according to a statement from Amazon general counsel David Zapolsky, the disputed practices have “helped to spur competition and innovation across the retail industry.” The FTC’s case, according to Zapolsky, argues that “everyday retail competition doesn’t exist.”

According to a statement from FTC Chair Lina Khan, Amazon allegedly employed “punitive and coercive tactics” to illegally retain a monopoly.

The FTC’s action is similar to, but more extensive than, several individual consumer lawsuits against Amazon that were brought in recent years and are still pending in the same U.S. federal court.

The private antitrust cases provide us a sneak peek at some of the legal defenses Amazon may use to fight the FTC’s action.

The pricing practices of the platform were being challenged in one of the instances, and Amazon’s attorneys stated that no court “has ever condemned a business practice that requires low prices in a retail store for consumers.”

Amazon is also defending itself against allegations made in a separate private civil action that it has suppressed competition in the shipping and fulfillment services market.

In April, U.S. District Judge Ricardo Martinez rejected that claim because the plaintiffs’ consumers were not actual purchasers of logistical services. However, the court allowed the customers to file a fresh complaint.

Martinez, a George W. Bush appointment, may be assigned to the FTC’s lawsuit because, according to the agency, numerous Amazon cases that are now before him are factually and legally relevant to the new complaint.

According to antitrust expert Sean Sullivan of the University of Iowa’s law department, American judges are often “wary of using antitrust law to punish low-priced behavior.”

According to Sullivan, there isn’t always a clear distinction between “good low pricing” — determined by market competition — and “bad low pricing” that aids a corporation in gaining or retaining market dominance.

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