In recent years, a flurry of antitrust lawsuits have been filed against Amazon by state attorneys general and the Federal Trade Commission (FTC). However, as court rulings have begun to show, many of these cases are not only ill-conceived but completely disconnected from market realities.
Take the lawsuit brought by Washington D.C. Attorney General Karl Racine, which alleged that Amazon’s “price parity” agreements with third-party sellers were anticompetitive. In March, a Superior Court judge threw out the case, concluding that DC had failed to prove these agreements resulted in higher prices or violated antitrust laws. Strike one.
Next, a federal judge in Seattle dismissed a consumer class action lawsuit alleging that Amazon illegally ties its “Buy Box” feature, which provides favorable product placement, to its shipping service Fulfillment by Amazon (FBA). In his order, U.S. District Judge Ricardo S. Martinez found that the plaintiffs, Amazon Prime members Angela Hogan and Andrea Seberson, lacked antitrust standing to bring their tying and monopolization claims under the Sherman Act.
Judge Martinez noted that to establish antitrust standing, the plaintiffs must allege an antitrust injury: that is, “the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” However, the plaintiffs failed to show they actually participated in the market where they alleged competition to be restrained: the logistics market for fulfillment services like FBA.
As the court explained, “Plaintiffs did not pay for the allegedly monopolized product (logistic services, specifically FBA)” and were at best “indirect purchasers” barred from bringing antitrust damages claims under the Supreme Court’s Illinois Brick precedent. The judge gave the plaintiffs 30 days to amend their complaint, but the writing is on the wall. Strike two.
Then the FTC, ignoring two federal court decisions, sued Amazon over the same FBA claims that were raised and twice rejected by federal judges. In essence, states and federal antitrust enforcers keep bringing the same flawed lawsuits expecting different outcomes – and it is us the taxpayers who are footing the bill for these ludicrous actions. Why are our government enforcers so determined to waste taxpayer dollars on these clearly flawed legal attacks on one of America’s most beloved businesses.
Perhaps, it’s because ambitious state AGs view antitrust as a tool to raise their political profile, consequences be damned. Meanwhile, the FTC under Chair Lina Khan seems more interested in colluding with European regulators on the Digital Markets Act than protecting American consumers from legitimate harms. As online fraud reaches record levels, Khan and her team jet off to Brussels on the taxpayer dime.
Antitrust should be about maximizing consumer welfare and market competition, not scoring political points or advancing a progressive policy agenda at the expense of consumers. Unfortunately, that message seems to be lost on the growing cadre of state and federal regulators lining up to take swings at a political target.
With two strikes already on the board, taxpayers can only hope that a more prudent approach prevails before we’re stuck footing the bill on even more of these misguided crusades. Otherwise, Americans have to ask: is antitrust enforcement the new progressive slush fund?