Amazon sued by FTC and 17 US states over allegations it inflates online prices and overcharges sellers

Amazon finds itself entangled in a legal battle as U.S. regulators, along with 17 states, filed a landmark antitrust lawsuit against the retail giant after a four-year investigation.

On Tuesday, the U.S. Federal Trade Commission (FTC) took a significant step by filing a highly anticipated antitrust lawsuit against Amazon.com. The lawsuit, filed in the U.S. District Court for the Western District of Washington, marks the culmination of an extensive investigation spanning multiple years into Amazon’s business practices. It represents one of the most significant legal challenges ever posed to the company over its nearly three-decade-long history.

The FTC, in collaboration with participating states, also outlined its intent to seek a permanent injunction from the court. This injunction is intended to curtail Amazon’s purportedly unlawful activities and reduce its monopolistic influence, thereby reinstating a climate of healthy competition, Reuters reported.

“Left unchecked, Amazon will continue its illegal course of conduct to maintain its monopoly power,” the FTC said in its complaint which asked the court “to put an end to Amazon’s illegal course of conduct, pry loose Amazon’s monopolistic control, deny Amazon the fruits of its unlawful practices, and restore the lost promise of competition.”

In the legal action, the FTC urged the court to consider “any preliminary or permanent equitable relief, including but not limited to structural relief, necessary to restore fair competition.” Structural relief in antitrust jargon generally means a company sells an asset, such as a part of its business.

In antitrust terminology, “structural relief” typically entails a company divesting an asset, which could involve the sale of a portion of its business.

The FTC said that Amazon’s practice of restricting retailers on its marketplace from offering discounts, a maneuver seen as detrimental to healthy competition. Additionally, the complaint raises concerns about Amazon’s insistence on sellers utilizing its ‘fulfillment service,’ a reference to the extensive network of delivery vans and warehouses that underpins its operations. Critics have argued that this aspect of Amazon’s business warrants separation from its web-based activities.

The allegations leveled against Amazon revolve around anti-competitive measures, particularly anti-discounting practices that deter sellers from offering lower prices for their products on non-Amazon platforms. These claims echo those made in a separate lawsuit filed last year by the state of California. The complaint further asserts that Amazon has the capability to downplay listings featuring lower prices on alternative websites, thereby influencing consumer choices.

Meanwhile, Amazon said that the FTC lawsuit is misguided and could negatively impact consumers by potentially raising prices and slowing down delivery services.

“The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,” said David Zapolsky, Amazon’s general counsel.