In the realm of retail and antitrust law, few cases have garnered as much attention as the Federal Trade Commission’s (FTC) recent case against Amazon. The FTC’s complaint, alleging anticompetitive practices by Amazon, stands on shaky ground both in terms of factual substantiation and legal precedent.
Today, Amazon filed a Motion to Dismiss (MTD) to the court, asking it to throw out the FTC’s lawsuit.
This piece aims to dissect the FTC’s allegations and demonstrate how they represent a figment of the agency’s imagination, potentially detrimental to American consumers and the retail industry at large.
Amazon Retail Practices: Commonplace and Consumer-Centric
The FTC’s complaint unfairly targets retail practices that are not only widespread but also decidedly pro-consumer. It criticizes Amazon for matching rivals’ discounts and prioritizing competitively priced offers in its ‘Featured Offer’ or ‘Buy Box.’
“The conduct challenged in the [FTC’s] Complaint consists of commonplace retail practices that presumptively benefit consumers” (Page 8).
“Matching rivals’ discounts is not… an ‘anti-discounting tactic’; it is discounting, and it is affirmatively encouraged by the antitrust laws” (Page 15).
This highlights the paradox in the FTC’s stance: condemning practices that epitomize competitive, consumer-focused retailing. What’s more, these are pretty standard practices used by many in the retail industry, both online and in-store.
Antitrust laws were designed to foster competition and benefit consumers, not to penalize companies for offering good deals. The FTC’s stance here is perplexing. By challenging these common retail practices, they are not upholding antitrust law but rather misinterpreting it to the detriment of the very consumers they claim to protect.
Lack of Clear Remedial Goals
The FTC’s complaint against Amazon is notably vague about what it specifically wants the company to change. It fails to clarify a remedy or identify alternative conduct in which Amazon should have engaged. The irony is that under the FTC’s theory, Amazon would be required to feature what it knows are bad deals. This runs counter to the principle of consumer welfare, which is the cornerstone of antitrust law.
“The [FTC’s] Complaint does not specify a remedy…or allege how any alternative ‘but for’ world would be better for consumers” (Page 15).
By failing to identify a clear remedy or explain how an alternative world would be better for consumers, the FTC’s complaint appears more as an exercise in legal overreach than a genuine effort to protect consumer interests.
Failure to Substantiate Claims With Evidence
Perhaps the most glaring issue with the FTC’s complaint is its lack of factual support. After a years-long investigation, one would expect a detailed analysis of how Amazon’s practices have harmed consumers or competitors. However, the complaint is seriously lacking in this regard. There are no facts showing that Amazon’s conduct has led to higher prices or restricted competition in any meaningful way.
The FTC’s failure to identify specific products or categories where prices have risen from Amazon’s actions is telling. The complaint seems to assume, without basis, that Amazon’s efforts to keep prices low paradoxically harm consumers. This is not just implausible; it is illogical.
“To state a Sherman Act claim, the [FTC’s] Complaint must plausibly allege facts showing…that Amazon engaged in anticompetitive conduct that has an anticompetitive effect. It fails on both fronts” (Page 8).
Furthermore, the FTC’s claim that Amazon’s policies harm multihoming sellers (those who sell on Amazon and other platforms) and rival marketplaces is unsupported by factual evidence. The complaint does not identify a single rival that has been foreclosed or show how multihoming sellers are significantly disadvantaged.
The Bigger Picture: Harm to Consumers and Retail Innovation
The FTC’s actions against Amazon are not just a case of legal overreach; they threaten to stifle innovation and harm consumers. By penalizing Amazon for engaging in competitive pricing strategies, the FTC risks creating a chilling effect across the entire retail sector. Companies may become hesitant to offer discounts or feature competitively priced products, fearing legal scrutiny.
This scenario is antithetical to the spirit of antitrust laws, which are meant to encourage competition and benefit consumers. The FTC’s approach here could ironically lead to higher prices and less choice for consumers – the very outcomes antitrust laws are designed to prevent.
Legal Malpractice: A Concerning Possibility
The FTC attorneys who signed off on the FTC’s complaint against Amazon may need to reconsider their understanding of antitrust law – this includes the Chair – who is an attorney – as well as several of the Commissioners. By endorsing a case that lacks factual foundation and misconstrues legal principles, they may have engaged in professional irresponsibility. Antitrust law is complex, but its core tenet is clear: protect competition and consumer welfare. The FTC’s case against Amazon does neither.
“Anecdotes are insufficient to plead a claim under antitrust law’s rule of reason” (Page 9).
Final Thoughts: This Is Such a Waste
This lawsuit is a troubling misadventure in antitrust enforcement. It misconstrues common retail practices as anticompetitive, lacks a clear remedial goal, and most importantly, fails to substantiate its allegations with concrete facts. In adopting this approach, the FTC not only undermines the principles of antitrust law but also poses a risk to consumer welfare and retail innovation. And the FTC has wasted significant taxpayer dollars and agency time pursuing this case.
As the legal process unfolds, one hopes that clearer heads will prevail and recognize the baselessness of the FTC’s allegations. In the interest of consumers, the resources of taxpayers, and the spirit of fair competition, this case should be seen for what it truly is: an unwarranted attempt to penalize success under the guise of antitrust enforcement.