NJ Sues Amazon As Part Of Federal Monopoly Lawsuit

NEW JERSEY — The Federal Trade Commission and the state attorney general in New Jersey and 16 other states sued Amazon this week, accusing the e-commerce giant of using "anticompetitive and unfair strategies to illegally maintain its monopoly power."

The lawsuit, filed Tuesday in federal court in Amazon’s home state of Washington, is the result of a yearslong investigation into the company’s businesses and one of the most significant legal challenges brought against it in its nearly 30-year history.

The complaint contends that Amazon’s actions allow it to keep rivals and sellers from lowering prices, degrade shopper experiences, overcharge sellers and prevent rival businesses from fairly competing against the company. New Jersey Attorney General Matthew Platkin said the company "harms New Jersey residents and businesses by stifling competition and limiting consumer choice" in a statement on the lawsuit.

“Our complaint seeks to promote fair competition, encourage innovation, and force Amazon to relinquish its monopoly," Platkin said Friday. "It’s time to break free from their digital stranglehold and create a level playing field.”

The lawsuit alleges Amazon's anti-competitive practices occur in the online superstore for shoppers and the online marketplace servers that sellers purchase, saying that the company allegedly employs anti-discounting tactics that punish other online retailers from offering prices lower than than its own.

According to the lawsuit, if Amazon finds a seller offering lower prices on products elsewhere, it can bury discounters so far down in Amazon's search results that they essentially are invisible. The result of this tactic is higher prices across the entire internet, the lawsuit asserts.

“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," FTC Chair Lina M. Khan said in a commission release.

"Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”

Seattle-based Amazon.com Inc. said the FTC is “wrong on the facts and the law” and had departed from its role of protecting consumers and competition.

“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do,” Amazon General Counsel David Zapolsky said in a prepared statement.

Amazon also pressures sellers to obtain “Prime” eligibility for their products, the lawsuit claims. That virtual necessity for doing business on Amazon has made it much more expensive for sellers to also offer their products on other platforms. Such coercion is illegal and has limited competitors' ability to compete against Amazon, the lawsuit contends.

With its incredible power across both the online superstore market and online marketplace services market, Amazon extracts what the lawsuit contends is "enormous monopoly rents from everyone within its reach."

Among the allegations in the lawsuit are that Amazon:

• Degrades the customer experience by replacing organic product search results with paid advertisements that worsen search quality.

• Biasing Amazon's search results to preference Amazon's own products over other that Amazon knows are of higher quality.

• Charges costly fees on the hundreds of thousands of sellers that must rely on Amazon to stay in business. These fees hurt not only sellers but also consumers who then pay increased prices for products sold on Amazon.

The FTC and its state partners are seeking a permanent federal court injunction prohibiting Amazon from engaging in the allegedly unlawful conduct and loosening Amazon's monopolistic control to restore competition.

The Associated Press contributed to this report.