A complaint filed this week by the United States Federal Trade Commission against Amazon.com (AMZN.O) adds to a series of legal challenges exposing the retail behemoth to billions of dollars in potential penalties.
Amazon.com and other Big Tech businesses have been investigated for antitrust violations by US regulators, and the FTC has long been expected to take legal action against the online retailer.
State and federal courts in the United States are debating competition law claims involving Amazon’s pricing tactics, fulfillment centers, and relationships with big book sellers.
Here are some examples of those cases.
ATTORNEYS GENERAL OF CALIFORNIA AND WASHINGTON, D.C.
Attorneys general in California and the District of Columbia have sued Amazon.com over its product pricing practices, accusing it of unfairly prohibiting merchants from offering lower rates on their own websites or at competitors such as Walmart (WMT.N), Target (TGT.N), and Costco (COST.O).
The attorney general of Washington, D.C. sued in May 2021, while California Attorney General Rob Bonta sued Amazon in September 2022. A District of Columbia higher court judge rejected the district’s action last year, stating the city had failed to refute Amazon’s assertion that its “prices are the result of lawful, unchoreographed free-market behavior.” The district’s appeal is now pending.
In the California case, Judge Ethan Schulman of the San Francisco Superior Court ruled against Amazon’s motion to dismiss the complaint in March. According to Schulman, California has demonstrated that Amazon’s regulations “have had the anticompetitive effect of raising prices on competing retail marketplaces as well as on third-party sellers’ own websites.”
CLAIMS FOR PRICE INCREASE BY CONSUMERS
Amazon is facing two consumer complaints in federal court in Seattle. One accuses Amazon of increasing prices on its platform, while the other claims Amazon’s actions have raised the pricing of goods sold elsewhere.
In March, U.S. District Judge Richard Jones found that Amazon must face customer accusations that its pricing tactics artificially raised the cost of items offered by other shops, in violation of antitrust laws in the United States. Jones’ decision occurred in the context of a potential antitrust class action with damages expected to range between $55 billion and $172 billion.
In the other consumer action, U.S. District Judge John Chun ruled earlier this month that the plaintiffs — five residents of California and Maryland who said they routinely buy on Amazon’s website — could pursue claims challenging Amazon’s pricing policy for goods sold on its website.
Chun noted that the consumer plaintiffs “allege the type of conduct that antitrust law is intended to prevent.” Amazon has disputed the charges in both lawsuits and will have the opportunity to contest the claims’ merits later.
COMPLETION CENTERS
A prospective class of customers is pursuing claims filed in federal court in Seattle in 2021 that Amazon has attempted to limit competition for shipping and fulfillment services, causing shoppers to pay more for purchases.
Amazon gained an early success in April when U.S. District Judge Ricardo Martinez found that the plaintiffs had failed to demonstrate why they should be permitted to sue over logistics methods – how and when a purchased item arrives at the buyer’s home. Amazon maintained that because consumers do not purchase fulfillment services, they cannot sue over them.
The case, brought by two Amazon Prime members, claimed that Amazon was illegally “tying” the sale of third-party products to the use of the company’s “Fulfillment by Amazon” program. The plaintiffs have filed an additional legal challenge, and Amazon’s newest move to have the lawsuit dismissed is pending.
E-BOOKS
A prospective class action filed in federal court in Manhattan accuses Amazon of fraudulently increasing the price of retail trade e-books on the site.
The case, filed in 2021, claimed that Amazon had illegally banned the publishers from offering their ebooks at lower prices on other sites, including their own. “TPrices for e-books have risen. Output has declined,” the consumers’ lawyers claim. “Consumer choice has been limited. Product innovation has been stunted.”
In July, U.S. Magistrate Judge Valerie Figueredo suggested that certain allegations against Amazon be pursued but not against the other defendants, five major book publishers. U.S. District Judge Gregory Woods has yet to rule on Amazon’s and the plaintiffs’ objections to Figueredo’s report and recommendation.