The Federal Trade Commission and 17 state attorneys general sued Amazon Inc. BB #:283186, September 26, alleging that the online retailer is a monopolist that uses anticompetitive and unfair strategies to illegally maintain its monopoly power.
However, the suit “properly excludes” the online perishable grocery category.
According to an FTC press release, “The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.
“The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance.
“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina M. Khan. “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. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
In the court filing, the FTC says online purchases of perishable groceries are not part of Amazon’s online superstore market.
“Perishable groceries are foods that cannot be safely stored at room temperature, including fresh fruits and vegetables, raw meat, and frozen items. Though some online superstores may also offer online purchases of perishable grocery products, this distinct business line is not part of the relevant market and is excluded from the market share numbers,” the suit said.
“Consumers’ experiences when shopping online for perishable groceries differ from their experiences purchasing other retail goods. For example, consumers shopping for online perishable grocery products typically must select a specific time for the perishable grocery products to be delivered, which often also requires the customer to be present at the time of delivery to be able to promptly store those items. Both Walmart.com’s and Amazon’s online perishable grocery businesses require shoppers to choose a delivery window or ‘time slot.’ Neither Walmart.com nor Amazon typically require shoppers to choose time slots when purchasing other products online.”
“Competition for online perishable grocery sales is also different from competition between online superstores. Competition for online perishable grocery sales is generally more localized, whereas online superstore competition is nationwide. This difference is because groce1ry quality and shelf life are seasonal and regional. For example, perishable fruit may be available only during certain times and in certain regions.”
The FTC, along with its state partners, seek a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and restore competition.
Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin joined the commission’s lawsuit.
The FTC vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Western District of Washington was 3-0.