By: Bradley Bostwick
On Friday, March 18, a Washington D.C. Superior Court judge dismissed Washington D.C.’s lawsuit alleging that Amazon had broken antitrust laws. Antitrust laws ensure a free and open market by promoting competition and protecting consumers from anticompetitive business practices. The complaint filed by D.C. Attorney General Karl Racine last year alleging antitrust violations argued that Amazon’s contracts with third party sellers caused higher prices and that they locked first-party sellers into anti-competitive contracts.
Despite generating more revenue than other big tech companies like Google and Facebook, Amazon had not been subject to the types of scrutiny the other companies faced. For example, Google and Facebook have repeatedly been sued by federal and state authorities for their dominance in their respective markets. The case against Amazon was the first of its kind to challenge Amazon’s practices as anticompetitive. D.C.’s complaint argued that Amazon’s pricing policy—that allows sellers to set their own prices—has, in effect, raised prices for consumers. The rationale behind this argument stems from Amazon monitoring prices on different platforms and if it finds that a product is offered at a lower price elsewhere, Amazon might not feature that seller’s offer on their marketplace. Consequently, it leads sellers to not lower their prices on other platforms.
The lawsuit pointed out that until 2019, Amazon explicitly prohibited U.S. sellers from offering lower prices for their products elsewhere online; however, Amazon removed that policy and replaced it with their current “Fair Pricing Policy.” The lawsuit argued that this new policy was merely an identical substitute and hurts consumers by producing higher prices. Amazon claims the policy protects consumers from being overcharged and provides sellers with information so their products can be featured. Amazon also stated that it takes more factors than price, such as delivery speed, into consideration when deciding which products to feature.
Amazon’s motion to dismiss the lawsuit was granted by D.C. Superior Court Judge Hiram Puig-Lago on March 18 according to a docket entry. The records did not state the reason for dismissal. The motion was opposed by Attorney General Racine, who is now considering all legal options moving forward. A spokeswoman for the D.C. attorney general stated that “the Superior Court got this wrong, and its oral ruling did not seem to consider the detailed allegations in the complaint, the full scope of the anticompetitive agreements, the extensive briefing and a recent decision of a federal court to allow a nearly identical lawsuit to move forward.” In addition, the spokeswoman stated that D.C. Attorney General Racine’s office was “considering our legal options.”
Despite being the first of its kind, the dismissal of this antitrust action is great news for Amazon and very bad news for those hoping to contract with the multipurpose giant. First, this case was brought under D.C. law rather than federal law, therefore its impact would have been limited had it even been successful. If the lawsuit was brought under federal law, this would have been far more daunting for Amazon because of the potential national consequences and future lawsuits on similar grounds. Second, no other Attorney Generals joined in on the lawsuit and filed similar claims in their respective jurisdictions. While the reason for the dismissal is still unknown, the spokeswoman’s comments suggest that the judge found no basis for the claims. This type of outcome is encouraging for Amazon’s success in future lawsuits on similar grounds if they arise. Lastly, following the dismissal, Amazon will not be forced to change its pricing policies for e-commerce which have evidently been extremely successful in helping them grow and expand. Amazon’s biggest revenue source comes from its e-commerce, so it is important not to cause any disruptions in this business segment.
Although it was only the first government lawsuit in the United States arguing Amazon had violated antitrust laws, Amazon’s success in getting the case thrown out is very big news for those on both sides of the argument.
Student Bio: Bradley Bostwick is a second-year law student at Suffolk University Law School. He is a staffer on the Journal of High Technology Law. Bradley received a Bachelor of Science Degree in Economics with a Minor in Finance from Syracuse University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
