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  • Writer's pictureDaria Danila

US Regulatory Body Sues Amazon Over Unjustly Exploiting Monopoly

Amazon landing page © Daria Danila

The e-retail giant Amazon was sued last week by the Federal Trade Commission (FTC) along with 17 US states, for using its monopolistic position to increase profits, at the expense of both Amazon sellers and buyers. The Groninger talked to an expert to understand the case, and its possible impact on the European market.

In the nearly 200-page document, the FTC describes that Amazon knowingly employs tactics which interfere with the activity of the sellers who make their products available through their platform. These tactics are alleged to discourage competition within the market.

One such practice relates to the sellers being “punished” if they sell their products on other platforms at a cheaper price. According to the FCT, this can result in the product pages being pushed far down the search result list, significantly impacting sales.

Amazon has released a statement reacting to this lawsuit, where they maintain that the business practices questioned by the FCT are there to improve their consumer’s experience, not to hinder competition.

Bringing in the verdict

Associate professor of European Law at the University of Groningen, Justin Lindeboom, explains that the outcome of the case put forward by the FCT is difficult to predict, in part because of the confidential data in the filing.

This data relates to, among others, the number of Amazon users, and how many of them are Prime members, in the US. “[The numbers] really make a difference to how powerful Amazon is, and to whether this is a problem,“ he says, referring to data in the FCT’s lawsuit which has been redacted.

Further, Lindeboom notes that the novelty of the case will also play a part in the proceedings. Amazon’s way of doing business is only as old as the Internet, which may impact a court’s ability to apply antitrust laws (which prohibit the restriction of competition within markets) to this economic phenomenon.

He explains that, while the FCT’s case is extensive, much is still unsure: “ [The FCT] seems to have a strong position, but whether the courts will go along with it remains to be seen,” he says.

European countries where Amazon delivers products © The Groninger (Created with MapChart)

While this case concerns Amazon’s presence in the US, the platform is also available to Europeans in 10 countries, where the European Commission has been investigating its business practices. Lindeboom notes that these investigations have seemingly pointed in the similar direction as the FCT case.

He believes that the US case will have echoes within the European antitrust laws. “I’m quite sure that the Commision will further investigate Amazon for similar acts, as the FCT,” he says.

Too little, too late

In spite of the ease which Amazon provides, European consumers do not seem to be very sympathetic to the company’s recent troubles. Student Tudor Ștefan does not habitually use the platform because of previous allegations of poor working conditions in the company’s warehouses. With the recent news of the FCT case, he is yet more reluctant to use it. “If I do, it will be on a strictly if-this-is-necessary basis,” he explains.

Even if Amazon were to end the actions which are alleged to illegally maintain its monopoly, not everyone would be willing to start making their purchases on the platform. Lana Gosse, a recent university graduate, would still prefer to support smaller, local businesses instead of ordering products from Amazon. “I think it would require a very large amount of change for Amazon to actually become an equal-footed player with other companies,” she says.

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