Over 100 years ago, Congress responded to railroad and oil monopolies’ stranglehold on the economy by passing the United States’ first-ever antitrust laws. When those reforms weren’t enough, Congress created the Federal Trade Commission to protect consumers and small businesses from predation. Today, unchecked monopolies again threaten economic competition and our democratic institutions, so it’s no surprise that the FTC is bringing a historic antitrust suit against one of the biggest fish in the stream of commerce: Amazon.
Make no mistake: modern-day monopolies, particularly the Big Tech giants (Amazon, Apple, Alphabet, and Meta), are active threats to competition and consumers’ welfare. In 2020, the House Antitrust Subcommittee concluded an extensive investigation into Big Tech’s monopolistic harms by condemning Amazon’s monopoly power, which it used to mistreat sellers, bully retail partners, and ruin rivals’ businesses through the use of sellers’ data. The Subcommittee’s report found that, as both the operator of and participant in its marketplace, Amazon functions with “an inherent conflict of interest.”
The FTC’s lawsuit builds off those findings by targeting Amazon’s notorious practice of “self-preferencing,” in which the company gathers private data on what products users are purchasing, creates its own copies of those products, then lists its versions above any competitors on user searches. Moreover, by bullying sellers looking to discount their products on other online marketplaces, Amazon has forced consumers to fork over more money than what they would have in a truly-competitive environment.
But perhaps the best evidence of Amazon’s illegal monopoly power is how hard the company has worked for years to squash any investigation into its actions. For decades, Amazon has relied on the classic ‘revolving door’ strategy of poaching former FTC officials to become its lobbyists, lawyers, and senior executives. This way, the company can use their institutional knowledge to fight the agency and criticize strong enforcement actions. These “revolvers” defend the business practices which their former FTC colleagues argue push small businesses past their breaking points. They also can help guide Amazon’s prodigious lobbying efforts, which reached a corporate record in 2022 amidst an industry wide spending spree in which “the top tech companies spent nearly $70 million on lobbying in 2022, outstripping other industries including pharmaceuticals and oil and gas.”
Amazon’s in-house legal and policy shops are absolutely stacked full of ex-FTC officials and staffers. In less than two years, Amazon absorbed more than 28 years of FTC expertise with just three corporate counsel hires: ex-FTC officials Amy Posner, Elisa Kantor Perlman and Andi Arias. The company also hired former FTC antitrust economist Joseph Breedlove as its principal economist for litigation and regulatory matters (read: the guy we’re going to call as an expert witness to say you shouldn’t break us up) in 2017.
It goes further than that. Last year, Amazon hired former Senate Judiciary Committee staffer Judd Smith as a lobbyist after he previously helped craft legislation to rein in the company and other Big Tech giants. Amazon also contributed more than $1 million to the “Competitiveness Coalition,” a Big Tech front group led by former Sen. Scott Brown (R-MA). The coalition counts a number of right-wing, anti-regulatory groups among its members, including the Competitive Enterprise Institute, a notorious purveyor of climate denialism, and National Taxpayers Union, an anti-tax group regularly gifted op-ed space in Fox News and the National Review.
This goes to show the lengths to which Amazon will go to avoid oversight from any government authority. True, the FTC has finally filed suit against Amazon, and that is a good thing. But Amazon, throughout their pursuance of ever growing monopoly power, hired their team of revolvers precisely for this moment. These ex-officials bring along institutional knowledge that will inform Amazon’s legal defense. They will likely know the types of legal arguments the FTC will rely on, how the FTC conducted its pretrial investigations, and the personalities of major players in the case.
This knowledge is invaluable to Amazon. It’s like hiring the assistant coach of an opposing team and gaining access to their playbook — you know what’s coming before it happens and you can prepare accordingly. Not only that, but this stream of revolvers makes it incredibly difficult to know the dedication of some regulators towards enforcing the law against corporate behemoths. How is the public expected to trust its federal regulators to protect them from monopoly power when a large swath of its workforce might be waiting for a monopoly to hire them? (Of course, that’s why we need both better pay for public servants as well as stricter restrictions on public servants revolving out to the corporations they were supposedly regulating.)
While spineless revolvers make a killing defending Amazon, the actual people and businesses affected by their strong arming tactics are applauding the FTC’s suit. Following the FTC’s filing, sellers praised the Agency on Amazon’s Seller Central forum, calling it “long overdue” and Amazon’s model as a “race to the bottom.” One commenter even wrote they will be applying to the FTC once Amazon’s practices force them off the platform. This is the type of revolving we may be able to support. When the FTC is staffed with people who care more about reigning in monopolies than receiving hefty paychecks from them in the future (e.g., Chair Lina Khan), we get cases that actually protect consumers and small businesses.
The FTC’s suit against Amazon signals that the federal government will no longer stand by as monopolies hollow-out the economy and corrupt the inner-workings of our democracy, but the revolvers will make every step difficult. They will be in the corporate offices and federal courtrooms advising Amazon on how best to undermine their former employer’s legal standing. They will be in the media, claiming to be objective as a former regulator, while running cover for Amazon’s shady practices that the business press will gobble up. The prevalence of these revolvers makes it difficult for current regulators to succeed while simultaneously undermining public trust in a government that should work for people, not corporations. Former civil servants who put cash from Amazon over the regulatory mission to which they had once been committed are turncoats to the public good. They should be scorned by the public and ignored by government officials and media alike.
Andrea Beaty is Research Director at the Revolving Door Project, focusing on anti-monopoly, executive branch ethics and housing policy. KJ Boyle is a research intern with the Revolving Door Project. Max Moran is a Fellow at the Revolving Door Project. The Revolving Door Project scrutinizes executive branch appointees to ensure they use their office to serve the broad public interest, rather than to entrench corporate power or seek personal advancement.
The Federal Trade Commission has accused Amazon of illegally maintaining its monopoly, extracting supra-competitive fees on merchants that use Amazon’s platform. If and when the fact-finder determines that Amazon violated the antitrust laws, we propose structural remedies to address the competitive harms. Behavioral remedies have fallen out of favor among antitrust scholars. But the success of a structural remedy cannot be taken for granted.
To briefly review the bidding, the FTC’s Complaint alleges that Amazon prevents merchants from steering customers to a lower-cost platform—that is, a platform that charges a lower take rate—by offering discounts off the price it charges on Amazon. Amazon threatens merchants’ access to the Buy Box if merchants are caught charging a lower price outside of Amazon, a variant of a most-favored-nation (MFN) restriction. In other words, Amazon won’t allow merchants to share any portions of its savings with customers as an inducement to switch platforms; doing so would put downward pressure on Amazon’s take rate, which has climbed from 35 to 45 percent since 2020 per ILSR.
The Complaint also alleges that Amazon ties its fulfillment services to access to Amazon Prime. Given the importance of Amazon Prime to survival on Amazon’s Superstore, Amazon’s policy is effectively conditioning a merchant’s access to its Superstore on an agreement to purchase Amazon’s fulfillment, often at inflated rates. Finally, the Complaint alleges that Amazon gives its own private-label brands preference in search results.
These are classic exclusionary restraints that, in another era, would be instinctively addressed via behavioral remedies. Ban the MFN, ban the tie-in, and ban the self-preferencing. But that would be wrongheaded, as doing so would entail significant oversight by enforcement authorities. As the DOJ Merger Remedies Manual states, “conduct remedies typically are difficult to craft and enforce.” To the extent that a remedy is fully conduct-based, it should be disfavored. The Remedies Manual appears to approve of conduct relief to facilitate structural relief, “Tailored conduct relief may be useful in certain circumstances to facilitate effective structural relief.”
Instead, there should be complete separation of the fulfillment services from the Superstore. In a prior piece for The Sling, we discussed two potential remedies for antitrust bottlenecks—the Condo and the Coop. In what follows, we explain that the Condo approach is a potential remedy for the Amazon platform bottleneck and the Coop approach a good remedy for the fulfillment center system. Our proposed remedy has the merit of allowing for market mechanisms to function to bypass the need for continued oversight after structural remedies are deployed.
Breaking Up Is Hard To Do
Structural remedies to monopolization have, in the past, created worry about continued judicial oversight and regulation. “No one wants to be Judge Greene.” He spent the bulk of his remaining years on the bench having his docket monopolized by disputes arising from the breakup of AT&T. Breakup had also been sought in the case of Microsoft. But the D.C. Circuit, citing improper communications with the press prior to issuance of Judge Jackson’s opinion and his failure to hold a remedy hearing prior to ordering divestiture of Microsoft’s operating system from the rest of the company, remanded the case for determination of remedy to Judge Kollar-Kotelly.
By that juncture of the proceeding, a new Presidential administration brought a sea change by opposing structural remedies not only in this case but generally. Such an anti-structural policy conflicts with the pro-structural policy set forth in Standard Oil and American Tobacco—that the remedy for unlawful monopolization should be restructuring the enterprises to eliminate the monopoly itself. The manifest problem with the AT&T structural remedy and the potential problem with the proposed remedy in Microsoft is that neither removed the core monopoly power that existed, thus retaining incentives to engage in anticompetitive conduct and generating continued disputes.
The virtue of the structural approaches we propose is that once established, they should require minimal judicial oversight. The ownership structures would create incentives to develop and operate the bottlenecks in ways that do not create preferences or other anticompetitive conduct. With an additional bar to re-acquisition of critical assets, such remedies are sustainable and would maximize the value of the bottlenecks to all stakeholders.
Turn Amazon’s Superstore into a Condo
The condominium model is one in which the users would “own” their specific units as well as collectively “owning” the entire facility. But a distinct entity would provide the administration of the core facility. Examples of such structures include the current rights to capacity on natural gas pipelines, rights to space on container ships, and administration for standard essential patents and for pooled copyrights. These examples all involve situations in which participants have a right to use some capacity or right but the administration of the system rests with a distinct party whose incentive is to maximize the value of the facility to all users. In a full condominium analogy, the owners of the units would have the right to terminate the manager and replace it. Thus, as long as there are several potential managers, the market would set the price for the managerial service.
A condominium mode requires the easy separability of management of the bottleneck from the uses being made of it. The manager would coordinate the uses and maintain the overall facility while the owners of access rights can use the facility as needed.
Another feature of this model is that when the rights of use/access are constrained, they can be tradable; much as a condo owner may elect to rent the condo to someone who values it more. Scarcity in a bottleneck creates the potential for discriminatory exploitation whenever a single monopolist holds those rights. Distributing access rights to many owners removes the incentive for discriminatory or exclusionary conduct, and the owner has only the opportunity to earn rents (high prices) from the sale or lease of its capacity entitlement. Thus, dispersion of interests results in a clear change in the incentives of a rights holder. This in turn means that the kinds of disputes seen in AT&T’s breakup are largely or entirely eliminated.
The FTC suggests skullduggery in the operation of the Amazon Superstore. Namely, degrading suggestions via self-preferencing:
Amazon further degrades the quality of its search results by buying organic content under recommendation widgets, such as the “expert recommendation” widget, which display Amazon’s private label products over other products sold on Amazon.
Moreover, in a highly redacted area of the complaint, the FTC alleges that Amazon has the ability to “profitably worsen its services.”
The FTC also alleges that Amazon bars customers from “multihoming:”
[Multihoming is] simultaneously offering their goods across multiple online sales channels. Multihoming can be an especially critical mechanism of competition in online markets, enabling rivals to overcome the barriers to entry and expansion that scale economies and network effects can create. Multihoming is one way that sellers can reduce their dependence on a single sales channel.
If the Superstore were a condo, the vendors would be free to decide how much to focus on this platform in comparison to other platforms. Merchants would also be freed from the MFN, as the condo owner would not attempt to ban merchants from steering customers to a lower-cost platform.
Condominiumization of the Amazon Superstore would go a long way to reducing what Cory Doctorow might call the “enshittification” of the Amazon Superstore. Given its dominance over merchants, it would probably be necessary to divest and rebrand the “Amazon basics” business. Each participating vendor (retailer or direct selling manufacturer) would share in the ownership of the platform and would have its own place to promote its line of goods or services.
The most challenging issue is how to handle product placement on the overall platform. Given the administrator’s role as the agent of the owners, the administrator should seek to offer a range of options. Or leave it to owners themselves to create joint ventures to promote products. Alternatively, specific premium placement could go to those vendors that value the placement the most, rather than based on who owns the platform. The revenue would in turn be shared among the owners of the condo. Thus, the platform administrator would have as its goal maximizing the value of the platform to all stakeholders. This would also potentially resolve some of the advertising issues. According to the Complaint,
Amazon charges sellers for advertising services. While Amazon also charges sellers other fees, these four types constitute over [redacted] % of the revenue Amazon takes in from sellers. As a practical matter, most sellers must pay these four fees to make a significant volume of sales on Amazon.
Condo ownership would mean that the platform constituents would be able to choose which services they purchase from the platform, thereby escaping the harms of Amazon’s tie-in. Constituents could more efficiently deploy advertising resources because they would not be locked-into or compelled to buy from the platform.
Optimization would include information necessary for customer decision-making. One of the other charges in the Complaint was the deliberate concealment of meaningful product reviews:
Rather than competing to secure recommendations based on quality, Amazon intentionally warped its own algorithms to hide helpful, objective, expert reviews from its shoppers. One Amazon executive reportedly said that “[f]or a lot of people on the team, it was not an Amazonian thing to do,” explaining that “[j]ust putting our badges on those products when we didn’t necessarily earn them seemed a little bit against the customer, as well as anti-competitive.”
Making the platform go condo does not necessarily mean that all goods are treated equally by customers. That is the nature of competition. It would mean that in terms of customer information, however, a condominiumized platform would enable sellers to have equal and nondiscriminatory access to the platform and to be able to promote themselves based upon their non-compelled expenditures.
Turn Amazon’s Fulfillment Center in a Coop
The Coop model envisions shared user ownership, management, and operation of the bottleneck. Such transformation of ownership should change the incentives governing the operation and potential expansion of the bottleneck.
The individual owner-user stands to gain little by trying to impose a monopoly price on users including itself or by restricting access to the bottleneck by new entrants. So long as there are many owners, the primary objective should be to manage the entity so that it operates efficiently and with as much capacity as possible.
This approach is for enterprises that require substantial continued engagement of the participants in the governance of the enterprise. With such shared governance, the enterprise will be developed and operated with the objective of serving the interest of all participants.
The more the bottleneck interacts directly with other aspects of the users’ or suppliers’ activity, the more those parties will benefit from active involvement in the decisions about the nature and scope of the activity. Historically, cooperative grain elevators and creameries provided responses to bottlenecks in agriculture. Contemporary examples could include a computer operating system, an electric transmission system, or social media platform. In each, there are a myriad of choices to be made about design or location or both. Different stakeholders will have different needs and desires. Hence, the challenge is to find a workable balance of interests. That maximizes the overall value of the system for its participants rather than serving only the interests of a single owner.
This method requires that no party or group dominates the decision processes, and all parties recognize their mutual need to make the bottleneck as effective as possible for all users. Enhancing use is a shared goal, and the competing experiences and needs should be negotiated without unilateral action that could devalue the collective enterprise.
As explained above, Amazon tie-in effectively requires that all vendors using its platform must also use Amazon’s fulfillment services. Yet distribution is distinct from online selling. Hence, the distribution system should be structurally separated from the online superstore. Indeed, vendors using the platform condo may not wish to participate in the distribution system regardless of access. Conversely, vendors not using the condo platform might value the fulfillments services for orders received on their platforms. Still other vendors might find multi-homing to be the best option for sales. As the Complaint points out, multi-homing may give rise to other benefits if not locked into Amazon Distribution:
Sellers could multihome more cheaply and easily by using an independent fulfillment provider- a provider not tied to any one marketplace to fulfill orders across multiple marketplaces. Permitting independent fulfillment providers to compete for any order on or off Amazon would enable them to gain scale and lower their costs to sellers. That, in turn, would make independent providers even more attractive to sellers seeking a single, universal provider. All of this would make it easier for sellers to offer items across a variety of outlets, fostering competition and reducing sellers’ dependence on Amazon.
The FTC Complaint alleges that Amazon has monopoly power in its fulfillment services. This is a nationwide complex of specialized warehouses and delivery services. The FTC is apparently asserting that this system has such economies of scale and scope that it occupies a monopoly bottleneck for the distribution of many kinds of consumer goods. If a single firm controlled this monopoly, it would have incentives to engage in exploitative and exclusionary conduct. Our proposed remedy to this is a cooperative model. Then, the goal of the owners is to minimize the costs of providing the necessary service. These users would need to be more directly involved in the operation of the distribution system as a whole to ensure its development and operation as an efficient distribution network.
Indeed, its users might not be exclusively users of the condominiumized platform. Like other cooperatives, the proposal is that those who want to use the service would join and then participate in the management of the service. Separating distribution from the selling platform would also enhance competition between sellers who opt to use the cooperative distribution and those that do not. For those that join the distribution cooperative, the ability to engage in the tailoring of those distribution services without the anticompetitive constraints created by its former owner (Amazon) would likely result in reduced delivery costs.
Separation of Fulfillment from Superstore Is Essential for Both Models
We propose some remedies to the problems articulated in the FTC’s Amazon Complaint—at least the redacted version. Thus, we end with some caveats.
First, we do not have access to the unredacted Complaint. Thus, to the extent that additional information might make either of our remedies improbable, we certainly do not have access to that information as of now.
Second, these condo and cooperative proposals go hand in hand with other structural remedies. There should be separation of the Fulfillment services from the Superstore and Amazon Brands might have to be divested or restructured. Moreover, their recombination should be permanently prohibited. These are necessary conditions for both remedies to function properly.
Third, in both the condo and coop model, governance structures must be in place to assure that both fulfillment services and the Superstore are not recaptured by a dominant player. In most instances, a proper governance structure would bar that. The government should not hesitate to step in should capture be evident.
Peter C. Carstensen is a Professor of Law Emeritus at the Law School of University of Wisconsin-Madison. Darren Bush is Professor of Law at University of Houston Law Center.
At some point soon, the Federal Trade Commission is very likely to sue Amazon over the many ways the e-commerce giant abuses its power over online retail, cloud computing and beyond. If and when it does, the agency would be wise to lean hard on the useful and powerful law at the core of its anti-monopoly authority.
The agency’s animating statute, the Federal Trade Commission Act and its crucial Section 5, bans “unfair methods of competition,” a phrase Congress deliberately crafted, and the Supreme Court has interpreted, to give the agency broad powers beyond the traditional antitrust laws to punish and prevent the unfair, anticompetitive conduct of monopolists and those companies that seek to monopolize industries.
Section 5 is what makes the FTC the FTC. Yet the agency hasn’t used its most powerful statute to its fullest capability for years. Today, with the world’s most powerful monopolist fully in the commission’s sights, the time for the FTC to re-embrace its core mission of ensuring fairness in the economy is now.
The FTC appears to agree. Last year, the agency issued fresh guidance for how and why it will enforce its core anti-monopoly law, and the 16-page document read like a promise to once again step up and enforce the law against corporate abuse just as Congress had intended.
Why Section 5?
The history of the Section 5—why Congress included it in the law and how lawmakers expected it to be enforced—is clear and has been spelled out in detail: Congress set out to create an expert antitrust agency that could go after bad actors and dangerous conduct that the traditional anti-monopoly law, the Sherman Act, could not necessarily reach. To do that, Congress crafted Section 5 so that the FTC could stop tactics that dominant corporations devise to sidestep competition on the merits and instead unfairly drive out their competitors. Congress gave the FTC the power to enforce the law on its own, to stop judges from hamstringing the law from the bench, as they have done to the Sherman Act.
As I’ve detailed, the Supreme Court has issued scores of rulings since the 1970s that have collectively gutted the ability of public enforcement agencies and private plaintiffs to sue monopolists for their abusive conduct and win. These cases have names—Trinko, American Express, Brooke Group, and so on—and, together, they dramatically reshaped the country’s decades-old anti-monopoly policy and allowed once-illegal corporate conduct to go unchecked.
Many of these decisions are now decades old, but they continue to have outsized effects on our ability to policy monopoly abuses. The Court’s 1984 Jefferson Parish decision, for example, made it far more difficult to successfully prosecute a tying case, in which a monopolist in one industry forces customers to buy a separate product or service. The circuit court in the government’s monopoly case against Microsoft relied heavily on Jefferson Parish in overturning the lower court’s order to break Microsoft up. More recently, courts deciding antitrust cases against Facebook, Qualcomm and Apple all relied on decades of pro-bigness court rulings to throw out credible monopoly claims against powerful defendants.
Indeed, the courts’ willingness to undermine Congress was a core concern for lawmakers when drafting and passing Section 5. Three years before Congress created the FTC, the U.S. Supreme Court handed down its verdict in the government’s monopoly case against Standard Oil, breaking up the oil trust but also establishing the so-called “rule of reason” standard for monopoly cases. That standard gave judges the power to decide if and when a monopoly violated the law, regardless of the language of, or democratic intent behind, the Sherman Act. Since then, the courts have marched the law away from its goal of constraining monopoly power, case by case, to the point that bringing most monopolization cases under the Sherman Act today is far more difficult than it should be, given the simple text of the law and Congress’ intent when it wrote, debated, and passed the act.
That’s the beauty and the importance of Section 5. Congress knew that the judicial constraints put on the Sherman Act meant it could not not reach every monopolistic act in the economy. That’s now truer than ever. Section 5 can stop and prevent unfair, anticompetitive acts without having to rely on precedent built up around the Sherman Act. It’s a separate law, with a separate standard and a separate enforcement apparatus. What’s more, the case law around Section 5 has reinforced the agency’s purview. In at least a dozen decisions, the Supreme Court has made clear that Congress intended for the law to reach unfair conduct that falls outside of the reach of the Sherman Act.
So the law is on solid footing, and after decades of sidestepping the job Congress charged it to do, the FTC appears ready to once again take on abuses of corporate power. And not a moment too soon. After decades of inadequate antitrust enforcement, unfairness abounds, particularly when it comes to the most powerful companies in the economy. Amazon perches atop that list.
A Recidivist Violator of Antitrust Laws
Investigators and Congress have repeatedly identified Amazon practices that appear to violate the spirit of the antitrust laws. The company has a long history of using predatory pricing as a tactic to undermine its competition, either as a means of forcing companies to accept its takeover offers, as it did with Zappos and Diapers.com, or simply as a way to weaken vendors or take market share from competing retailers, especially small, independent businesses. Lina Khan, the FTC’s chair, has called out Amazon’s predatory pricing, both in her seminal 2017 paper Amazon’s Antitrust Paradox, and when working for the House Judiciary Committee during its big tech monopoly investigation.
Under the current interpretation of predatory pricing as a violation of the Sherman Act, a company that priced a product below cost to undercut a rival must successfully put that rival out of business and then hike up prices to the point that it can recoup the money it lost with its below-cost pricing. Yet with companies like Amazon—big, rich, with different income streams and sources of capital—it might never need to make up for its below-cost pricing by hiking up prices on any one specific product, let alone the below-cost product. Indeed, as Jeff Bezos’s vast fortune can attest, predatory pricing can generate lucrative returns simply by sending a company’s stock price soaring as it rapidly gains market share.
If Amazon wants to sell products from popular books to private-label batteries at a loss, it can. Amazon makes enormous profits by taxing small businesses on its marketplace platform and from Amazon Web Services. It can sell stuff below cost forever if it wants to–a clearly unfair method of competing with any other single-product business–all while avoiding prosecution under the judicially weakened Sherman Act. Section 5 can and should step in to stop such conduct.
Amazon’s marketplace itself is another monopolization issue that the FTC could and should address with Section 5. The company’s monopoly online retail platform has become essential for many small businesses and others trying to reach customers. To wit, the company controls at least half of all online commerce, and even more for some products. As an online retail platform, Amazon is essential, suggesting it should be under some obligation to allow equal access to all users at minimal cost. Of course, that’s not what happens; as my organization has documented extensively, Amazon’s captured third-party sellers pay a litany of tolls and fees just to be visible to shoppers on the site. Amazon’s tolls can now account for more than half of the revenues from every sale a small business makes on the platform.
The control Amazon displays over its sellers mirrors the railroad monopolies of yesteryear, which controlled commerce by deciding which goods could reach buyers and under what terms. Antitrust action under the Sherman Act and legislation helped break down the railroad trusts a century ago. But if enforcers were to declare Amazon’s marketplace an essential facility today, the path to prosecution under the Sherman Act would be difficult at best.
Section 5’s broad prohibition of unfair business practices could prevent Amazon’s anticompetitive abuses. It could ban Amazon from discriminating against companies that sell products on its platform that compete with Amazon’s own in-house brands, or stop it from punishing sellers that refuse to buy Amazon’s own logistics and advertising services by burying their products in its search algorithm. The FTC could potentially challenge such conduct under the Sherman Act, as a tying case, or an essential facilities case. But again, the pathway to winning those cases is fraught, even though the conduct is clearly unfair and anticompetitive. If Amazon’s platform is the road to the market, then the rules of that road need to be fair for all. Section 5 could help pave the way.
These are just a few of the ways we could see the FTC use its broad authority under Section 5 to take on some of Amazon’s most egregious conduct. If I had to guess, I imagine the FTC in a potential future Amazon lawsuit will likely charge the company under both the Sherman Act and the FTC Act’s Section 5 for some conduct it feels the traditional anti-monopoly statute can reach, and will rely solely on Section 5 for conduct that it believes is unfair and anticompetitive, but beyond the scope of the Sherman Act in its current, judicially constrained form. For example, while the FTC could potentially use the Sherman Act to address Amazon’s decision to tie success on its marketplace to its logistics and advertising services, the agency’s statement makes clear that Section 5 has been and can be used to address “loyalty rebates, tying, bundling, and exclusive dealing arrangements that have the tendency to ripen into violations of the antitrust laws by virtue of industry conditions and the respondent’s position within the industry.”
Might this describe Amazon’s conduct? Very possibly, but that will ultimately be up to the FTC to decide. Suing Amazon under both statutes would invite the court to make better choices around the Sherman Act that are more critical of monopoly abuses, and help develop the law so that the FTC can eagerly embark on its core mission under Section 5: to help ensure markets are fair for all.
Ron Knox is a Senior Researcher and Writer for ILSR’s Independent Business Initiative.