Amazon's practices are 'the essence of competition,' it tells judge

Why would FTC call that antitrust, it asks in dismissal request

Amazon is asking a judge to dismiss the antitrust case filed against it by the Federal Trade Commission and 17 states, arguing the case fails to allege any anticompetitive conduct or harm to consumers from its behavior.

According to the motion to dismiss [PDF] filed by Amazon's lawyers Friday, the practices the FTC singled out in its September lawsuit are far from anticompetitive - they're actually "the essence of competition" and useful to consumers who shop online.

The FTC and attorneys general from 17 US states allege in the original lawsuit that Amazon used several tactics to thwart competition, such as using algorithms to undercut competing online retailers. Amazon was also accused of forcing third-party sellers on Amazon to use the online souk's own fulfillment services in order to qualify for free shipping, listing promotion and discounted prices, without which buyers were likely to look elsewhere.

Rather than directly refuting those claims in its freshly filed motion, Amazon says the FTC complaint "does not identify a single product or product category for which prices have risen as a result of the challenged conduct." 

"At most, the Complaint contains vague allegations that a handful of sellers have responded not by lowering their prices in Amazon's store, but by raising them elsewhere," Amazon argues, adding that "anecdotes are insufficient to plead a claim under antitrust law's rule of reason."

As for the allegations that Amazon's fulfillment service, and badges added to third-party seller accounts indicating that they use Fulfillment By Amazon (FBA), are anticompetitive because their existence on the site punishes third-party sellers that choose to use another fulfillment service, Amazon claims it can't help that its system is better. 

"The Prime badge represents Amazon's promise that customers will receive fast and reliable delivery on that product," Amazon says in the filing. "Such branding is presumptively procompetitive because it points consumers to offers that will be quickly and dependably delivered, which Plaintiffs acknowledge is something customers want." 

US monopoly law makes no mention of benefit to consumers as a means to justify practices that punish competitors. 

The FTC declined to comment on Amazon's motion to dismiss. 

Nessie? We didn't revive it

One of the key elements of the FTC's case has been Amazon's pricing algorithm, dubbed Nessie, which the Commission alleges (based on internal Amazon documents unearthed in discovery) was used to set prices on hot items at a lower level than the competition could afford to sustain. 

The FTC alleges Amazon used Nessie between 2014 and 2019 to reap $1.4 billion in excess profit. 

But because Nessie hasn't been in use since 2019, Amazon argues that including it in the case at all makes the argument untimely. The FTC, however, maintains in its case that Amazon has considered reviving it several times, most recently (per court documents) in early 2022. 

Amazon didn't revive Nessie, the company says, and therefore it shouldn't be held accountable for any past actions - which it didn't deny in the motion, but did say wasn't anticompetitive because "parallel pricing … is lawful in the absence of an anticompetitive agreement." 

"Amazon did not revive the Nessie experiment, as the complaint concedes … [and] cites no other basis for concluding that Amazon is 'about to' revive Nessie," Amazon says in its dismissal request. 

As to whether it might revive it at some time in the future, Amazon didn't directly answer any of our questions to that end, only sending us a link to the company's public policy page and pointing out a link to the filing with a quote from its general counsel David Zapolsky. 

"The FTC's complaint is deeply flawed as it challenges practices that are procompetitive, good for consumers, and common across retail," Zapolsky said. "As we've said before, the FTC's misguided case would harm consumers, hurt small and medium-sized sellers, and upend long-standing and well-considered doctrines." 

Current FTC chair Lina Khan is a major critic of big tech companies and has led multiple lawsuits, some successful and ther less so, against companies like Amazon, Microsoft and Meta. Khan recently argued in the Yale Law Journal (PDF) that current antitrust laws are insufficient to deal with "21st century monopolists" like Amazon. 

The FTC has yet to respond to Amazon's motion to dismiss the case, and the judge has not made a ruling; it isn't immediately clear when either may occur. ®

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