Amazon accused of monopoly practices in lawsuit by FTC, 17 states
LANSING, Mich. (WILX) - The world’s largest retailer is gearing up to hire nearly 250,000 new workers for the holiday season and it could also be gearing up for court.
It only takes one click to have items delivered by Amazon right to your front door. However, the service is being accused if inflating prices on other platforms, overcharging sellers, and stifling competition. Driving factors in the lawsuit filed against the e-commerce company.
Tuesday, Attorney General Dana Nessel joins the Federal Trade Commission (FTC) and 16 other states in filing a lawsuit against Amazon claiming its a monopoly abusing its power in the marketplace.
WMU Cooley Law Professor, Steven Cernak, broke down what this all means and what’s at stake.
“And these actions have the effect of both reducing quality for consumers, as well as reducing price.”
Cernak said the complaint filed by the FTC details the steps Amazon took to maintain its power as the largest online superstore. In its court filing, the FTC Chair Lina M, Kahn said:
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. [The] lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
The lawsuit accuses Amazon of stopping companies, like eBay and Walmart, from fairly competing.
“They are preventing some of their vendors from offering the same products at a lower price on other online superstore markets,” said Cernak.
Attorney General Dana Nessel said “the illegal monopolistic practices of the behemoth Amazon hurt both its own customers and its marketplace sellers, many of whom are small businesses.”
Nessel goes on to say “Amazon has taken improper steps to dominate all other online superstores and online marketplaces, decreased competition, and raised prices for everyday shoppers. The free market is meant to work for both buyers and sellers, and Amazon has corrupted the market in its favor.”
By avoiding competition on price, product selection, and quality, experts said Amazon makes sure rivals don’t threaten its dominance.
But not everyone agrees. Many consumers said they get good deals on Amazon.
“Well that’s certainly going to be one of Amazon’s defenses – that they are taking good care of their customers. And that all of these actions that are allegedly causing these problems are really ones that are necessary in providing good, high quality products,” said Cernak.
A judge will now determine if Amazon’s practices benefit both the buyer and seller.
This is not the first time the online retailer has been sued by the FTC. The agency sued Amazon back in June, alleging it used deceptive practices to enroll people into Amazon Prime and made it hard to cancel subscriptions. Amazon disputes the allegations.
Copyright 2023 WILX. All rights reserved.