The Federal Trade Commission announced on Tuesday that it is suing Amazon.
Dreamstime
The Federal Trade Commission said it is suing
Amazon.com,
alleging the company strategically prevents competition with its dominant online marketplace.
The FTC said on Tuesday that
Amazon
(ticker: AMZN) “violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.”
The agency said that Amazon’s actions allow the company to stop competitors from lowering prices, degrade quality for shoppers, overcharge sellers, and stifle innovation. The company plans to fight back in court.
The FTC alleges that Amazon’s “anticompetitive conduct” includes anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon. This includes Amazon allegedly putting sellers with discounted products lower in search results, it said.
The lawsuit also states that Amazon has steeply increased prices for sellers and that “it now reportedly takes close to half of every dollar from the typical seller that uses Amazon’s fulfillment services.”
David Zapolsky, Amazon’s general counsel and senior vice president for global public policy, said in a statement Tuesday that the practices the FTC is challenging have encouraged competition and innovation across the retail industry, and have given shoppers greater selection, faster shipping speeds, and lower prices.
“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,” Zapolsky said.
“The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court,” he added.
D.A. Davidson analyst Tom Forte maintained his Buy rating and $150 price target on Amazon stock Tuesday. “We see this as just the beginning of what should be a lengthy process and remain confident Amazon can manage its business well despite the distraction,” he wrote in a research note.
Shares of Amazon were down 3.8%, at $126.31, in recent trading, and were on track for their lowest close since June 21, according to Dow Jones Market Data. The stock has risen 50% this year.
Write to Angela Palumbo at [email protected]
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