Amazon urges court to dismiss FTC lawsuit

Online retail giant Amazon is calling on a U.S. district court in Seattle to dismiss a lawsuit filed in September by the Federal Trade Commissions (FTC) and 17 states, claiming that the company operates as a monopoly.

Filed in the Western Washington District Court in September, the lawsuit claims the company uses anti-competitive practices to stifle competition on price, quality, and product selection, and that Amazon prevents new companies from entering the marketplace. 

The lawsuit also includes support from attorneys general in Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin. 

On Friday, Amazon filed a motion to dismiss, claiming that the lawsuit fails to show that Amazon engaged in “anticompetitive conduct that has an anticompetitive effect.”

The lawsuit argues that Amazon punishes sellers and prevents other vendors from entering the market burying the listings of sellers who offer discounts on other sites. FTC Bureau of Competition Deputy Director John Newman said in September that Amazon “uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers.”

Related:Amazon tests fee-free grocery delivery in three cities

“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,” the FTC said in the lawsuit.  

The FTC also argues that the online retailer sets conditions for sellers’ products to gain “Prime” status, making it “substantially more expensive for sellers on Amazon to also offer their products on other platforms.”

Amazon’s motion to dismiss the lawsuit refutes the claim that its practices are anticompetitive. “Matching rivals’ discounts is not, in plaintiff’s jargon, an ‘anti-discounting tactic’; it is discounting, and the antitrust laws affirmatively encourage it.”
 
“Under the complaint’s theory, Amazon would be required to feature what it knows are bad deals,” the motion noted.

The company also argues that its conditions for achieving Prime status, which guarantees faster delivery, is competitive and pro-consumer.

“Finally, the complaint takes issue with Amazon’s practice of highlighting with the Prime
badge only those offers that it is confident will meet customers’ expectations for fast, free and reliable delivery,” the motion states. “It alleges that Amazon does so to push sellers to use Amazon’s fulfillment services. Even if that allegation were true (it is not), such seller recommendations—made to protect trust in a retailer’s brand and to deliver products to consumers with unprecedented speed, service and reliability—are presumptively procompetitive.”

Related:Amazon adds grocery delivery for non-members; more store openings in the works