Amazon Employs Unlawful Tactics to Freeze Rivals Out of the Market

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FTC v. Amazon Court Filing, retrieved on Sep 26, 2023, is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 33 of 80.


257. Amazon illegally maintains its monopolies through an interrelated course of conduct that blocks competition. First, Amazon deploys a series of anticompetitive practices that suppress price competition and push prices higher across much of the internet by creating an artificial price floor and penalizing sellers that offer lower prices off Amazon. Second, Amazon coerces sellers into using its fulfillment service to obtain Prime eligibility and successfully sell on Amazon. Each of these tactics—independently and collectively—prevents Amazon’s rivals from gaining scale and maintains Amazon’s monopolies.

258. Amazon first ensures that no other online rival can gain scale through offering prices lower than those listed on Amazon. Amazon accomplishes this anticompetitive goal through an interwoven set of algorithmic and contractual tactics, all of which rely on Amazon’s massive web-crawling apparatus that constantly tracks online prices. Amazon’s anti-discounting punishments tame price cutters into price followers, effectively halting real price competition. This conduct imposes costs on shoppers and sellers alike. Shoppers pay inflated prices on and off Amazon, as sellers must effectively submit to Amazon’s high fees by raising prices even on non-Amazon sites. Rivals no longer compete to offer sellers lower fees, since Amazon’s anti-discounting conduct prevents sellers from passing those savings on to shoppers.

259. For sellers, Amazon conditions access to Prime eligibility on sellers’ use of Amazon’s proprietary fulfillment service, FBA. Amazon’s coercion makes it more difficult and more expensive for sellers to sell on other marketplaces, which in turn makes it more difficult for rivals to attract sellers and compete with Amazon on product selection. The result is a feedback loop that continues to inhibit the growth of rivals and starve them of scale while maintaining and expanding Amazon’s dominant positions.

260. Each element of Amazon’s course of conduct mutually reinforces its monopolies in both relevant markets. For example, Amazon’s anti-discounting scheme stifles price competition. That same scheme also reinforces the exclusionary effects of Amazon’s use of Prime eligibility to force sellers to use FBA, by making it even less profitable for sellers to sell on other marketplaces. This feedback loop fuels a flywheel of anticompetitive harm, amplifying the aggregate effects and further widening the gulf between Amazon and everyone else.

261. Because Amazon suppresses meaningful competition on price and product selection, shoppers lack viable alternatives, further forcing sellers to submit to Amazon’s exclusionary tactics to reach those customers, and further allowing Amazon to accelerate and expand its dominance. Together, Amazon’s conduct blocks off competition, shopper traffic, and seller business in the interrelated relevant markets.

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This court case 2:23-cv-01495 retrieved on October 2, 2023, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.

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