Amazon hit by massive lawsuit in US over alleged anti-competitive trade practice

Amazon is facing a significant legal battle as the Federal Trade Commission and 17 U.S. states jointly filed a lawsuit against the e-commerce giant, alleging anti-competitive practices that inflate online prices and overcharge sellers.

This lawsuit, which was filed in a federal court in Amazon's home state of Washington, marks one of the most substantial challenges the company has faced in its nearly three-decade history.

The FTC and state regulators contend that Amazon has violated federal and state antitrust laws, seeking a permanent injunction to curb what they view as unlawful conduct.

Complaint against Amazon

The complaint accuses Amazon of discouraging sellers from offering lower prices on non-Amazon websites by burying such listings while imposing high fees on sellers. These fees force merchants to increase their prices on Amazon and other e-commerce platforms to remain competitive.

FTC Chairman Lina Khan expressed concerns about Amazon's monopoly power, stating that it enriches itself while raising prices and degrading services for millions of American consumers and thousands of businesses that rely on its platform.

Amazon's response

In response to the lawsuit, Amazon defended its practices, arguing that the FTC's claims were erroneous and could lead to fewer product choices, higher prices, and slower deliveries for consumers. The company's General Counsel, David Zapolsky, argued that the FTC had deviated from its mandate to protect consumers and competition.

The lawsuit also accuses Amazon of favouring its own brands over others, degrading search results with paid advertisements, and imposing hefty fees that consume a significant portion of sellers' revenues.

Furthermore, Amazon allegedly compels sellers to use its fulfilment service, Fulfillment by Amazon, to qualify for Amazon Prime, even if they prefer alternative fulfilment options.

Amazon's dominance in the market

Amazon's dominance in the e-commerce market, with an estimated 40% share, has drawn regulatory scrutiny. While there is speculation about the possibility of a forced breakup, the current focus is on liability.

Amazon has faced prior allegations of undercutting businesses that sell on its platform, which has led to calls for investigations into its market power.

Also Watch: Apple and Amazon face consumer lawsuit over alleged overcharging of iPhones and iPads