Minnesota Attorney General joins coalition suing Amazon

Allworth Advice: Amazon launches new shopping feature
Allworth Advice: Amazon launches new shopping feature
Published: Sep. 26, 2023 at 1:41 PM CDT
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ST. PAUL, MN. (Northern News Now) - Minnesota’s Attorney General has joined a lawsuit to sue Amazon for illegally maintaining monopolies.

It was announced Tuesday that Attorney General Keith Ellison joined the Federal Trade Commission (FTC) and a bipartisan coalition of 17 state attorney generals to sue Amazon.

RELATED: Amazon sued by FTC and 17 states over allegations it inflates online prices and overcharges sellers

They allege the company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.

In addition, they stated that Amazon’s actions allow it to stifle innovation and competition, degrade quality for shoppers, overcharge sellers, and prevent rivals from fairly competing against the company.

Attorney General Ellison and the bipartisan coalition allege that:

“Amazon 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. By stifling competition on price, product selection, and quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance. Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small, and affect over a hundred million shoppers.”

In a statement, Attorney General Ellison said:

“Millions of Minnesotans shop on Amazon, and large and small Minnesota businesses sell on Amazon’s marketplace as well. But Amazon’s illegal conduct has significantly stifled competition for much of the online economy and has driven up the cost of shopping — and selling — on Amazon for everyone.

Markets should be fair for all businesses and all consumers, and whether you’re buying necessities or trying to make a living, everyone deserves the benefits of healthy competition — including fair prices when you’re shopping, and reasonable fees when you’re doing business. I joined the FTC and a bipartisan group of attorneys general from around the country in this lawsuit because Amazon doesn’t get to break federal antitrust law and make it harder for all of us to afford our lives just because it’s big and powerful. Antitrust law is a very important tool in helping people afford their lives.”

Attorney General Ellison, the FTC, and the other states believe that Amazon’s anticompetitive conduct occurs in two markets, the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers.

The lawsuit alleges that Amazon’s anticompetitive tactics in these markets include:

  • Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
  • Conditioning sellers’ ability to obtain “Prime” eligibility for their products — a virtual necessity for doing business on Amazon — on sellers’ using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

According to the coalition, Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold.

Due to its large power in both the online superstore market and online marketplace services market, they allege that Amazon extracts enormous monopoly rents from everyone within its reach while degrading consumer experiences.

The results include:

  • Poorer customer experiences due to Amazon’s replacing relevant, organic search results with paid advertisements — and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.
  • Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.
  • Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.

In the lawsuit, Attorney General Ellison, along with his state and federal partners, are seeking a permanent order in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.

Others on the lawsuit include the attorneys general of Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.

You can report concerns about antitrust business practices to submit a report online via the Antitrust Report Form or call the Attorney General’s Office at (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).

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