In response to the F.T.C.’s complaint, Amazon said that its purportedly anticompetitive practices are actually common retail strategies–strategies which facilitate a healthy market, and often work to consumers’ advantage.
Amazon has asked a federal court to dismiss a U.S. government-led antitrust lawsuit, which claims that the company uses illegal strategies to inflate prices and control its competition.
According to The Associated Press, Amazon registered its response to the complaint more than two months after the Federal Trade Commission—along with 17 state attorneys general—filed their lawsuit against the Seattle-based e-commerce company.
In its 31-page filing, Amazon said that the conduct described as “anti-competitive” is, in fact, comprised of common retail practices that typically work to consumers’ advantage.
“Amazon promptly matches rivals’ discounts, features competitively priced deals rather than overpriced ones, and ensures best-in-class delivery for its Prime subscribers,” Amazon said.
“Those practices—the targets of this antitrust Complaint—benefit consumers and are the essence of competition,” Amazon added, asking that the lawsuit be “dismissed in its entirety.”
The New York Post notes that the F.T.C.’s lawsuit is one of several antitrust claims backed by both the Trump and Biden administrations.
In the Amazon case, U.S. attorneys allege that, sometime in early the 2010s, Amazon found that other retailers would reliably and consistently price-match some of its products. If, then, Amazon raised its prices, then competing retailers would raise theirs, too.
An Amazon warehouse. Photo by Scott Lewis, via Flickr. CC BY 2.0
Amazon purportedly “operationalized” these insights by creating a tool called Project Nessie, an algorithm designed to determine which items were being price-matched by the company’s competition.
After identifying price-matched products, Amazon would raise its prices, holding them and expecting rivals to do the same.
“In 2018, Amazon estimated that Project Nessie increased Amazon’s yearly profits by $334 million, including nearly $57 million in additional profit from selling higher-priced books and at least $10 million in additional profit in each of the twelve other product categories,” the F.T.C.’s lawsuit states. “The sole purpose of Project Nessie was to further hike consumer prices by manipulating other online stores into raising their prices.”
Project Nessie was employed on a broad scale beginning in 2014, but was allegedly turned on and off to avoid detection by consumer advocates and federal regulators.
However, in its response to the F.T.C. complaint, Amazon said that Project Nessie was terminated in 2019, with the company now opting to only match its competitors’ lowest prices.
Amazon also responded to the lawsuit’s other charges, including allegations that it coerces Prime sellers to use Amazon’s in-house logistics and delivery services, as well as claims that the breadth of its product offerings constitutes an unfair competitive advantage.
Amazon stressed that sellers’ use of its fulfillment services is voluntary, including from products sold through Prime.
It also argued that its rivals include other megaretailers like Walmart and Target, as well as more specialized stores such as Best Buy and the Home Depot.
“The complaint’s ‘online superstore’ market is implausible because it suggests, for example, that consumers would not consider buying a low-priced TV on Bestbuy.com only because Best Buy does not also sell shoes,” Amazon attorneys wrote.
Sources
Amazon algorithm juiced prices, cost US consumers $1 billion, new FTC lawsuit documents allege
Amazon asks federal judge to dismiss the FTC’s antitrust lawsuit against the company
Amazon asks judge to dismiss FTC antitrust lawsuit: ‘Common retail practices’
Amazon asks judge to dismiss FTC lawsuit, says no consumer harm shown
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