FTC is preparing potential antitrust case against Amazon
Feb. 3, 2023 Updated Fri., Feb. 3, 2023 at 7:27 p.m.
The U.S. Federal Trade Commission is preparing a possible lawsuit against Amazon.com Inc. that could be filed as soon as this spring, according to people familiar with the investigations.
The allegations the agency is preparing to make and the timeline for filing a complaint are still in flux, said the people, who asked not to be named speaking about a confidential probe.
The agency, which has both antitrust and consumer protection mandates, has been investigating Amazon for several years. A probe into the e-commerce giant’s retail business, which started in 2019 under the Trump administration, later expanded into recent acquisitions, such as the $8.45 billion MGM studio deal, and cancellation policies related to Amazon’s Prime service.
The company also has two deals under antitrust review at the agency: a $3.5 billion acquisition of One Medical parent 1Life Healthcare and the $1.65 billion deal to buy Roomba vacuum maker iRobot.
Those deals could be included in an FTC antitrust complaint, the people said.
California sued Amazon last fall, saying the company forces third-party merchants to agree to policies that lead to “artificially high prices” for consumers. That case, filed in California state court, accuses Amazon of punishing merchants that offer lower prices on other websites. The lawsuit is ongoing and could take years to resolve. The California attorney general’s office and the FTC have been in contact on their respective probes, the people said.
Small merchants on Amazon’s retail marketplace have complained for years about what they see as a one-sided relationship, accusing the company of arbitrarily enforcing its rules and being slow to respond when something goes wrong. Merchants have said Amazon punishes them by burying their products on its webstore when they offer lower prices elsewhere, such as on Walmart.com.
In a 2019 letter to federal lawmakers, an online merchant accused Amazon of forcing him and other sellers to use the company’s expensive logistics services, which in turn forces them to raise prices for consumers. The letter accused Amazon of “tying” its marketplace and logistics services together, a potential antitrust violation in which a company uses dominance in one market to give itself an advantage in another market where it’s less established.
That complaint drew the attention of regulators in the European Union, who reached a settlement with Amazon in December in which the online retail giant vowed to stop using nonpublic data on independent sellers on its marketplace for its competing retail business. Consumer watchdogs have accused Amazon of using deceptive practices to keep shoppers paying for the Prime membership program.
FTC Chair Lina Khan made a name for herself as a law student at Yale University with a groundbreaking 2017 legal paper into Amazon’s potential antitrust violations. She has pushed the agency to take a more aggressive role in challenging mergers and conduct by major tech platforms.
The FTC sued to block Microsoft’s acquisition of game publisher Activision Blizzard in December. It has an ongoing antitrust case challenging Facebook parent Meta Platforms over its acquisitions of Instagram and WhatsApp and sued to block the company from buying a virtual-reality start-up. A judge rejected the FTC’s move to block Meta from moving forward with the VR deal this week, though paused the merger from closing until next week to allow the agency time to decide whether to appeal.
Taking a page from Meta, Amazon has asked to recuse Khan from its cases citing her previous work. The agency has so far rebuffed Amazon’s requests as premature. Both a federal judge and the agency found Khan can participate in cases involving Meta, though the FTC’s sole Republican dissented from that decision.
The FTC and Amazon declined to comment. The Wall Street Journal reported earlier that the FTC is preparing a possible complaint.
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