The Federal Trade Commission and 17 state attorneys general are suing Amazon after accusing the e-commerce giant of unlawfully exploiting its monopoly to jack up prices and stifle competition.
The FTC said in a statement that Amazon’s alleged anti-competitive practices prevent sellers from lowering prices, degrades quality for shoppers and unlawfully excludes rivals in a statement on Tuesday.
“Amazon is a monopolist and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” FTC Chair Lina Khan told reporters on Tuesday.
The long-awaited lawsuit filed in the Western District of Washington comes after a years-long investigation into Amazon’s practices.
The FTC and a group of bipartisan state officials are asking the court to issue a permanent injunction that they say would prohibit Amazon from engaging in its unlawful conduct and loosen its “monopolistic control to restore competition.”
The agency claimed that Amazon uses anti-discounting measures to punish sellers and deter other online retailers from offering prices, ensuring its prices are higher for products across the internet.
It further alleges that Amazon’s search results are biased in favour of its own products, and that the tech giant requires vendors to use expensive third-party warehouses to obtain its Prime badge.
Hundreds of thousands of sellers are being forced to pay “costly fees” that amount to 50 per cent of their total revenues to remain in business, the FTC said.
“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” Ms Khan said in a statement.
“Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
David Zapolsky, Amazon’s general counsel and senior vice president of global public policy, described the FTC complaint as “wrong on the facts and the law” and said they looked forward to making their case in court.
“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.
“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do.”
Amazon had sought unsuccessfully to have Ms Khan recused from cases involving the company after claiming that her previous writings on antitrust law showed prejudice.
Attorneys general from Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin joined the FTC lawsuit.
Amazon’s stock price was down by nearly three per cent to $128.68 at 1pm.