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D.C. Attorney General Sues Amazon For Antitrust Violations, Ridin’ Dirty On Price Increases

D.C. Attorney General Sues Amazon For Antitrust Violations, Ridin’ Dirty On Price Increases

Amazon antitrust

D.C. Attorney General Sues Amazon For Antitrust Violations, Ridin' Dirty On Price Increases. Photo: District of Columbia Attorney General Karl Racine attends a news conference near the White House, Feb. 26, 2018 in Washington, D.C. (AP Photo/Andrew Harnik)

A U.S. government body has filed an anti-trust lawsuit against Amazon, the world’s largest retailer, for crushing the competition, joining the recent government antitrust cases against Google and Facebook.

The independent merchants who sell on Amazon’s digital marketplace — the same ones who helped make Amazon founder and CEO Jeff Bezos the world’s richest man with an estimated net worth of $177 billion — have long claimed that Amazon punishes them if they list their products for less on their own sites or others.

Washington, D.C. Attorney General Karl Racine announced this week that he’s suing Amazon for unfairly raising prices for consumers and suppressing innovation. Amazon allegedly maintained monopoly power illegally through pricing contracts with third-party sellers, CNBC reported.

Sellers on Amazon are effectively saying that Amazon dictates what happens on shopping sites all over the internet, and in doing so makes products more expensive for all of us, Shira Ovide wrote in a column for the New York Times.

“The DC Attorney General has it exactly backwards,” an Amazon spokesperson said Tuesday. “Sellers set their own prices for the products they offer in our store.”

Amazon insists that merchants are free to list and price their products however they choose, but it can choose “not to highlight” products that are not competitively priced, making them practically invisible to shoppers.

The antitrust lawsuits filed against Amazon, Google and Facebook “will take forever, and legal experts have said that the companies likely have the upper hand in court,” Ovide wrote.

In the 1970s, antitrust regulation was redefined to encourage low prices on items. Because Amazon is known for low prices, the business seemed safe from federal intervention, New York Times reported.

Predatory pricing is key in determining monopolistic behavior, according to Herbert Hovenkamp, author of 21 volumes of antitrust law. “Just being very big is not an antitrust violation,” Hovenkamp said in an interview with Market Watch. “As long as firms are acting on their own (and) they’re not conspiring with others, there hasn’t been a great deal of room for antitrust intervention. Low prices benefit consumers, but they frequently harm competitors. U.S. antitrust law has been pretty focused on what we call consumer welfare, which means that the dominant thrust of antitrust policy is toward low prices.”

Lina Khan, an antitrust and competition law specialist and nominee for the Federal Trade Commission, has long argued that low prices shouldn’t make Amazon immune to antitrust legislation.

Khan said Amazon should not be allowed to get away with anticompetitive behavior just because customers love its prices. Once-strong monopoly laws have been marginalized, she wrote, and Amazon is “amassing structural power that lets it exert increasing control over many parts of the economy,” New York Times reported:

Amazon has so much data on so many customers, it is so willing to forgo profits, it is so aggressive and has so many advantages from its shipping and warehouse infrastructure that it exerts an influence much broader than its market share. It resembles the all-powerful railroads of the Progressive Era, Ms. Khan wrote: “The thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor.”

Racine wants to end Amazon’s use of price agreements to crush the competition, CNBC reported. The lawsuit asks for damages and penalties to deter similar conduct. It seeks to stop Amazon’s ability to harm competition through a variety of remedies including breaking it up.

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