PENNSYLVANIA — Attorney General Michelle Henry this week announced her office has joined the Federal Trade Commission and 16 other Attorneys General in a lawsuit that would lessen Amazon.com, Inc.’s monopolistic practices that are detrimental to both sellers and buyers on the online mega-store platform.
The complaint alleges that Amazon engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.
Some of the specific conduct alleged is that Amazon manipulates consumers’ search results to showcase Amazon products, limiting views of cheaper products that might be higher-quality; and that Amazon penalizes sellers and charges exorbitant fees with some sellers paying up to half of their revenue to sell on Amazon’s platform.
By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon maintains a monopoly that impacts hundreds of billions of dollars in retail sales every year.
“Our intention is never to stifle innovation, but we have an obligation – one I take very seriously – to protect Pennsylvanians from the consequences of bad business practices, and anti-competitive behavior is a bad business practice that hurts consumers,” Attorney General Henry said. “Size should not mean free reign to manipulate consumers or the market to maximize profits. There are laws in place for good reason.”
The FTC and states allege Amazon’s anticompetitive conduct occurs in two markets — the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers. These tactics include:
- Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
- Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.
Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold. With its amassed power across both the online superstore market and online marketplace services market, Amazon extracts enormous monopoly rents from everyone within its reach.
The complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. It sets forth detailed allegations about how Amazon is 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. Tuesday’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.
The FTC, along with Pennsylvania and other state partners, are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and restore competition.
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 Commission’s lawsuit.
Read more about the lawsuit here.
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