The FTC’s case against Amazon fails crucial antitrust tests
Last Friday, Amazon requested that the court dismiss the FTC’s lawsuit, reiterating what others have been saying for months: the FTC’s case is incompatible with antitrust law and pays no attention to consumers’ best interests. It fails to provide a coherent theory of harm, any evidence of anticompetitive conducts, or a proposal for a better alternative. For all these reasons, Amazon concludes, the FTC’s “case” offers no case at all.
Here’s what you need to know:
The FTC’s case lacks a coherent theory of anticompetitive behavior. For example, the FTC alleges that it was illegal for Amazon to match rival retailers’ discounts. Amazon’s motion points out that these practices are not anti-competitive but merely common competitive practices that are necessary for a business to survive: it would be absurd—and legally disastrous—to say that Amazon could not offer consumers lower prices because other companies were already offering lower prices. The motion explains: “[The FTC’s approach] would expose retailers to legal risk whenever they lowered their prices to meet competition, and prices would predictably rise as a result… Fortunately, that is not the law.”
The FTC also mistakes protecting competition for protecting competitors. For one thing, the FTC fails to reasonably define who counts as a competitor. In order to show anticompetitive behavior, the FTC must demonstrate that a company stifled competition in a market. Project DisCo points out that the FTC restricts its market definition to e-commerce marketplaces, but in fact it is impossible to construct a market in this way. Brick-and-mortar retailers have e-commerce components, and vice versa, so “customers shop across many retailers every day, in every format.”
More basically, Amazon’s efforts to compete with competitors are perfectly normal, and the FTC does not argue that Amazon did anything to stifle competition, which is the crucial legal test. In fact, as Chamber of Progress’s Vidushi Dyall writes, the “practices that Amazon engages in are actually hallmarks of competition.” Amazon’s motion points out that the FTC is therefore missing the point of antitrust law. Citing the Supreme Court, Amazon quotes: “The antitrust laws… were enacted for ‘the protection of competition not competitors.'”
Setting aside the FTC’s lack of a legal theory, the FTC also provides no evidence to even suggest that Amazon raised prices for consumers, directly or indirectly. Time and time again, the FTC shows that Amazon actually lowered prices for consumers—not only its customers but buyers across the board. The motion states: “the [FTC] does not identify a single product or product category for which prices have risen as a result of the challenged conduct. Instead, it implausibly, and illogically, assumes that Amazon’s efforts to keep featured prices low on Amazon somehow raised consumer prices across the whole economy.” CCIA states this about the lack of evidence in its amicus brief: “The cart is decidedly before the horse in this lawsuit. A potential liability clock—the possible accrual of civil penalties and other monetary relief—has been started without the necessary legal predicate having been established.”
The FTC also does not show that applying antitrust law to the Amazon case would do anything to help competition and consumers. In fact, it would have the opposite effect. The motion explains: “The [FTC] does not specify a remedy [or] identify the alternative conduct it believes Amazon should have engaged in.” The only remedy that the FTC even alludes to is a “structural” one, which, as the App Association explains, is “a veiled reference to breaking up Amazon… [an outcome] making things more expensive and less efficient.”
The App Association continues: “Where antitrust intervention is warranted, the enforcer or plaintiff must help the court chart a better path than the one that exists prior to the lawsuit.”
The FTC case certainly does not chart a better path. For consumers, Project DisCo writes, there will be “fewer products to choose from, higher prices… and reduced options in the marketplace.”