Amazon will face FTC antitrust allegations in court, judge rules
Published in Business News
Nearly all of the Federal Trade Commission’s antitrust lawsuit against Amazon will move forward, according to newly unsealed court records.
Federal district judge John Chun ruled that the central tenets of the FTC’s sprawling lawsuit — that Amazon allegedly engaged in unfair methods of competition and maintained a monopoly — could go to trial. He dropped a few of the claims related to certain state laws.
That ruling was briefly thrown into flux last week when Judge Chun’s order was released under seal. A public summary of the ruling read that the court had partially granted Amazon’s motion to dismiss the lawsuit— but it did not specify which parts of the complaint had been thrown out.
On Monday, the court released an unredacted version of the ruling. Judge Chun ruled that nearly all of the 20 counts against Amazon could proceed, including all of the allegations that Amazon violated federal antitrust laws.
The FTC and 17 state attorneys general sued Amazon in September 2023, alleging that the company acted as a monopolist among e-commerce superstores and fulfillment providers. It added another state and Puerto Rico to the sweeping complaint this spring. Amazon has denied the allegations and filed a motion to dismiss the lawsuit in December.
Judge Chun’s ruling does not make a determination on the allegations but does allow the case to continue. It is set to go to trial in October 2026.
FTC spokesperson Douglas Farrar said Monday, “We are pleased with the court’s decision and look forward to moving this case forward.”
“The ways Amazon illegally maintains its monopolies and the harm they cause … will be on full display at trial,” Farrar continued. “This case ultimately seeks to pry loose Amazon’s monopolistic control and restore competition.”
Amazon on Monday was still confident in its ability to beat the allegations in court.
“The ruling at this early stage requires the court to assume all facts alleged in the complaint are true. They are not,” spokesperson Tim Doyle said, adding that the FTC’s complaint does not accurately represent how consumers shop online.
“Moving forward, the FTC will have to prove its claims in court and we’re confident those claims will not hold up when the FTC has to prove them with evidence,” Doyle said.
The FTC accused Amazon of promoting its own brands over competitors, preventing third-party sellers from setting discounted prices on other platforms and forcing merchants to pay steep fees to Amazon itself in order to get a coveted placement on Amazon’s website. For consumers, the FTC alleged, that meant higher prices, fewer options and a degraded shopping experience.
In its motion to dismiss the complaint, Amazon argued that the FTC’s actions would actually harm consumers by stifling innovation and bringing an end to practices that lower prices for shoppers.
“The truth is that Amazon’s practices are good for competition, consumers and the small- and medium-sized businesses that sell in our store, while the FTC’s approach would make shopping more difficult and costly,” Amazon spokesperson Doyle said Monday.
In his ruling, Judge Chun found that Amazon’s argument that it was “procompetitive” was not relevant at this stage of the legal process.
He found that the FTC had “adequately” alleged Amazon’s business practices could be anti-competitive, could prevent opportunities for rivals to succeed and could unnecessarily restrict competition.
Judge Chun also determined that the FTC had shown Amazon’s intent to do so when it cited statements from executives about how its policies could allow Amazon to avoid a “perfectly competitive market.”
The ruling also cleared the way for allegations against Amazon’s controversial pricing algorithm Project Nessie to move forward.
The FTC alleged that Amazon used Project Nessie to lead other online stores to lower their own prices, hoping to keep up with Amazon’s discounts. Amazon said that mischaracterizes the tool and that Project Nessie is no longer in use. But the FTC alleged that Amazon could turn the tool back on and had considered doing so as recently as 2022.
In his recent ruling, Judge Chun determined that the Project Nessie claim “survives” the motion to dismiss.
Judge Chun also granted the FTC’s request to bifurcate the case, or split up the discussions about liability and remedy. That means the court will first determine if Amazon engaged in anti-competitive and monopolistic behavior. Then, if it rules in favor of the FTC, the court would look at possible remedies.
This could “expedite and economize” the litigation, Judge Chun wrote in his recent ruling.
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