In April, the American Booksellers Association (ABA) filed a motion to join the FTC’s antitrust lawsuit against Amazon, arguing that Amazon lowers book prices beyond what booksellers can compete with. In a move that The Wall Street Journal called “curious,” the FTC recently asked the judge to deny the motion. The reason? The Association’s arguments actually undermine the FTC’s case by showing that the FTC’s claims about consumer harm and market analysis don’t add up.  

Here’s what you need to know: 

The ABA argues that Amazon lowers prices—the opposite of what the FTC alleges.

— The Association’s core argument is that Amazon outcompetes booksellers by lowering prices on books. Amazon can “sell books to retail customers at prices that ABA members cannot match except by forgoing a sustainable margin,” the ABA contends in their motion. 

— This argument directly contradicts the FTC’s argument against Amazon, which is that Amazon forces prices to stay high. A recent Wall Street Journal editorial explains: “On one hand, booksellers argue that Amazon uses its clout to obtain and sell books at lower prices, forcing them to cut their own prices. On the other, the FTC says Amazon uses its market power to block other businesses from selling at lower prices. Who’s right?”

The ABA also provides evidence that the FTC’s market definitions are unrealistic and incorrect.

— Part of the reason the ABA argues they can join the lawsuit is that booksellers compete directly with Amazon. The ABA’s complaint emphasizes that booksellers and Amazon compete for customers in the same market. Notably, the ABA, unlike the FTC, draws no distinction between online and brick-and-mortar retailers: it “represen[ts] online & in-person bookstores,” Chamber of Progress’ Vidushi Dyall points out.

— By showing that Amazon competes directly with both online and brick-and-mortar businesses, the ABA contradicts the FTC’s narrow market definitions, according to CCIA president Matt Schruers. The FTC argues that Amazon competes only with online superstores like eBay. But “booksellers, as well as other retailers, constantly compete with Amazon, which makes the FTC’s market definition implausible. The ABA’s motion reinforces that retail is an omnichannel market in which both online and brick-and-mortar stores compete with each other,” Schruers writes.  

— The FTC itself appears to understand that the ABA’s arguments weaken its antitrust case against Amazon. “[The ABA’s] claims do not raise common questions with those already in this case,” the FTC attests in its motion. One interpretation of this is that the agency views the ABA’s motion as potentially harming the FTC’s case. The FTC “has told a federal court that the booksellers should bring a completely different lawsuit,” translates the Independent Women’s Forum. 

Bottom line: The ABA demonstrates yet again that the FTC’s case doesn’t have the two critical components for an antitrust action: a showing of consumer harm and a logical market definition.

— As we’ve summarized before, the FTC has provided no evidence that Amazon raises prices, and the ABA gives evidence that Amazon actually lowers them. In addition, experts like CCIA’s Matt Schruers have already suggested that the FTC’s market definition is irrationally narrow. Geoffrey Manne of the International Center for Law and Economics wrote earlier this year that the FTC’s case “may well collapse” if “the [FTC’s] relevant markets prove indefensible upon fuller examination of the facts.” The ABA’s argument that Amazon competes with many more retailers than just the biggest superstores suggests that Manne’s analysis is correct.

— The FTC’s arguments “amount to the legal equivalent of flinging spaghetti at the wall and seeing what sticks,” the National Review concludes. 

— The inconsistencies that the ABA raises render the FTC’s case “incoherent” and remind us why the FTC’s pursuit of Amazon is harmful, The App Association president Morgan Reed observes. “The Booksellers’ motion to intervene in this case is just the latest example of how incoherent and anti-small business the FTC’s campaign against curated online marketplaces has been… The FTC’s relentless pursuit of eliminating the online marketplace services that benefit small businesses first and foremost would only serve to increase costs and barriers to entry by eliminating the distribution channels that make the most sense for small, startup firms.”