D.C. attorney general brings antitrust lawsuit against Amazon
WASHINGTON — D.C. Attorney General Karl Racine on Tuesday brought an antitrust complaint against Amazon, alleging that the e-commerce giant wields monopoly power that has resulted in higher prices for consumers.
Racine's office accused the company of fixing prices through contract provisions with third-party sellers who peddle their products on its platform. The attorney general said that Amazon prevents sellers from offering their products at lower prices or on better terms on any other online platforms, including their own websites, and that prohibition results in "artificially high" prices across e-commerce sales. (Amazon CEO and founder Jeff Bezos owns The Washington Post.)
"Amazon has used its dominant position in the online retail market to win at all costs," Racine, a Democrat, said in a statement. "It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favor."
Amazon pushed back against the lawsuit's claims, saying in a statement that the suit would force the company to feature higher prices.
"The DC Attorney General has it exactly backward — sellers set their own prices for the products they offer in our store," spokesman Jack Evans said in a statement. "Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively."
The suit follows years of Washington antitrust scrutiny of Amazon and comes as consumer advocates have called on the Biden administration to bring federal antitrust charges against the company. Biden recently nominated one of the company's key critics, Lina Khan, to the Federal Trade Commission.
The latest legal salvo highlights the critical role attorneys general are playing in checking tech giants' power, following years of little action from the federal government. Last year, groups of state attorneys general brought two antitrust lawsuits challenging Google's dominance in search and advertising. A separate group of 48 attorneys general filed a landmark antitrust suit against Facebook, seeking to break up the social networking giant.
Racine said his office did not coordinate with any federal regulators in bringing the complaint and that it had not coordinated with other state attorneys general.
Tuesday's lawsuit was filed in D.C. Superior court under D.C. antitrust laws, rather than federal antitrust laws, which could limit the scope of any judgment that comes from the action, said Herb Hovenkamp, an antitrust professor at the University of Pennsylvania Law School.
"It's not nearly as direct as a federal case," Hovenkamp said. "In this case, we've got one party suing in one state court, so if they win it's going to cover D.C. and that's pretty much it."
The complaint takes narrow aim at agreements that Amazon imposes on sellers on its marketplace, known as "most favored nation" clauses. Stacy Mitchell, co-director of the Institute for Local Self-Reliance and a top critic of Amazon, said the suit gets at the heart of one way that Amazon undermines competition, but that there are many others.
Mitchell said she hoped that other state attorneys general and the FTC were looking at other competition concerns related to Amazon, and she said Congress needs to pass legislation to address the company's dominance. She said far more drastic action is needed.
"To have a truly competitive e-commerce market, you have to break up Amazon," she said. "There's a fundamental conflict of interest when you own the infrastructure and you also compete on that infrastructure."
The lawsuit comes as the tech industry finds itself at the center of an antitrust reckoning in Washington. The Justice Department last year brought an antitrust suit against Google, while the Federal Trade Commission brought a case against Facebook. Lawmakers have also eyed competition concerns with Apple's App Store, which is currently the subject of litigation.
The top antitrust panel for the House of Representatives completed a sweeping, 16-month investigation last fall, finding that Apple, Amazon, Google and Facebook engaged in anticompetitive behaviors. Amazon competes with some of the smaller merchants that sell products on its marketplace, the investigation found, which "incentivizes Amazon to exploit its access to competing sellers' data and information, among other anticompetitive conduct."
Amazon responded to the investigation at the time in a lengthy blog post, calling the investigation "flawed" and defending its relationship with smaller merchants as "mutually beneficial."
The case could be an uphill battle for the D.C. attorney general, Hovenkamp said, because Amazon is a huge platform but not necessarily a market leader in every product it sells.
"This is a big problem with Amazon," he said. "Amazon is big, everyone knows it's big. However, when you start taking apart its individual products — other than e-books — it generally doesn't have a dominant share."
Amazon is also being sued for allegedly violating antitrust law by working with big book publishers to fix e-book prices. The suit, filed by a law firm in federal court in New York, is seeking class action status.
Racine's suit comes as lawmakers from both parties are seeking to update decades-old competition laws to ensure they're addressing the growing sway of tech giants.