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<\/p>\nBy: Trevor Vonu<\/p>\n
<\/p>\n
Beginning in late 2019, the Federal Trade Commission (FTC) launched an antitrust probe against e-commerce giant, Amazon.[1]<\/a> Several months ago, the FTC began interviewing small businesses selling products though Amazon in an effort to determine whether the corporation is using its market power to hurt competition.[2]<\/a> Reports indicate the FTC is asking these business owners to disclose how much of their revenue is generated from transactions through Amazon in comparison to other online retailers, specifically Walmart and EBay.[3]<\/a><\/p>\n This probe hints the FTC aims to determine whether small businesses and consumers have a legitimate alternative to Amazon.[4]<\/a> The FTC has confirmed its antitrust probe into Amazon, and has further requested the corporation to disclose information regarding acquisitions of other firms not previously submitted to either the FTC or the Department of Justice (DOJ).[5]<\/a> Other tech giants, Apple, Facebook, Google, and Microsoft are also subject to these requests for acquisition disclosures.[6]<\/a> Further, the FTC has expanded its investigation to include Amazon\u2019s cloud computing sector.[7]<\/a><\/p>\n What does all this mean? To put it briefly, the FTC has launched an antitrust investigation in order to determine whether Amazon has unfairly and illegally hurt competition in violation of the Sherman and Clayton Acts.[8]<\/a> The text comprising the Sherman Act is brief and separated into two parts. \u00a0Section One of the Sherman Act prohibits \u201cevery contract, combination, or conspiracy in restraint of trade,\u201d while Section Two outlaws monopolization, attempted monopolization, or conspiracy or combination to monopolize.”[9]<\/a> The Clayton Act prohibits other practices not addressed in the Sherman Act, namely mergers and acquisitions which, \u201csubstantially . . . lessen competition, or tend to create a monopoly.\u201d [10]<\/a><\/p>\n On its face, the FTC investigation does not seem focused on surfacing collusive activity. Rather, it appears the FTC is aiming to find evidence of a Section Two violation of the Sherman Act, as well as a Clayton Act violation.[11]<\/a> Through its investigation, it appears the FTC suspects Amazon of unfairly hindering competition through monopolistic behavior and\/or acquisitions tending to create a monopoly.[12]<\/a><\/p>\n To make matters worse for the Seattle-based corporation, India\u2019s Competition Commission has launched its own investigation into Amazon\u2019s business practices.[13]<\/a> In January, the Competition Commission indicated it would focus on allegations regarding Amazon\u2019s favoritism towards \u201cpreferred sellers,\u201d which has resulted in both competitive harm and economic harm to other sellers.[14]<\/a> Further, the Competition Commission will also investigate alleged discounting practices performed by Amazon.[15]<\/a> Retailers in India accuse Amazon of slashing its prices, resulting in losses measuring in the billions, in an effort to drive smaller sellers out of the marketplace.[16]<\/a><\/p>\n Amazon responded to India\u2019s probe earlier this month when the corporation launched legal action against the Competition Commission in an effort to bring this investigation to a swift end.[17]<\/a> Amazon contends the probe will cause \u201cirreparable\u201d damage to the corporation\u2019s reputation and goodwill.[18]<\/a> Unsurprisingly in its filing, Amazon categorically denied all allegations, calling the investigation \u201cbereft of any foundation\u201d and contends the investigative order \u201ccontain[s] no reference to the finding of an appreciable adverse effect on competition.\u201d[19]<\/a><\/p>\n Pending Amazon\u2019s suit seeking injunctive relief against India\u2019s Competition Commission, these investigations will likely be lengthy, as the agencies will continue to delve into the corporation\u2019s past dealings with one primary goal in sight\u2014to find evidence that Amazon\u2019s business practices have hurt competition in the marketplace.[20]<\/a><\/p>\n It will be interesting to see if the e-commerce behemoth will walk out of these investigations unscathed. Or will the regulatory agencies manage to buckle down on Amazon\u2019s corporate activity? If it is any indicator, AMZN share prices fell less than 1% after reports of the FTC investigation surfaced.[21]<\/a> Further, AMZN share prices have recently hit all-time highs, despite India launching its own antitrust investigation.[22]<\/a><\/p>\n <\/p>\n [1]<\/a> Spencer Soper & Ben Brody, Amazon Probed by U.S. Antitrust Officials Over Marketplace<\/em>, Bloomberg (Sept. 11, 2019), https:\/\/www.bloomberg.com\/news\/articles\/2019-09-11\/amazon-antitrust-probe-ftc-investigators-interview-merchants.<\/p>\n [2]<\/a> Id<\/em>.<\/p>\n [3]<\/a> Id<\/em>.<\/p>\n [4]<\/a> Id<\/em>.<\/p>\n [5]<\/a> John McKinnon & Deepa Seetharaman, FTC Expands Antitrust Investigation Into Big Tech<\/em>, Wall Street Journal (Feb. 11, 2020), \u00a0<\/u>https:\/\/www.wsj.com\/articles\/ftc-plans-to-examine-past-acquisitions-by-big-tech-companies-11581440270.<\/p>\n [6]<\/a> Laura Feiner, FTC will examine prior acquisitions by Alphabet, Amazon, Apple, Facebook and Microsoft<\/em>, CNBC (Feb. 11, 2020), https:\/\/www.cnbc.com\/2020\/02\/11\/ftc-will-examine-prior-acquisitions-by-big-tech-companies.html.<\/p>\n [7]<\/a> Dina Bass, David McLaughlin & Naomi Nix, Amazon Faces Widening U.S. Antitrust Scrutiny in Cloud Business<\/em>, Blomberg (Dec. 4, 2019), \u00a0<\/em>https:\/\/www.bloomberg.com\/news\/articles\/2019-12-04\/amazon-faces-widening-u-s-antitrust-scrutiny-in-cloud-business.<\/p>\n [8]<\/a> Russel Brandom, The Monopoly-Busting Case Against Google, Amazon, Uber, and Facebook<\/em>, The Verge (Sept. 5, 2018), https:\/\/www.theverge.com\/2018\/9\/5\/17805162\/monopoly-antitrust-regulation-google-amazon-uber-facebook.<\/p>\n [9]<\/a> 15 U.S.C. \u00a7 1 (2020).<\/p>\n [10]<\/a> 15 U.S. C. \u00a7 18 (2020).<\/p>\n [11]<\/a> See <\/em>Brandom, supra<\/em> note 8.<\/p>\n [12]<\/a> See<\/em> Feiner, supra<\/em> note 5.<\/p>\n [13]<\/a> Newly Pernell, India Orders Antitrust Probe of Amazon and Walmart\u2019s Flipkart<\/em>, Wall Street Journal (Jan. 13, 2020), https:\/\/www.wsj.com\/articles\/india-orders-antitrust-probe-of-amazon-and-walmarts-flipkart-11578932051.<\/p>\n [14]<\/a> Id<\/em>.<\/p>\n [15]<\/a> Aditya Kalra, Amazon challenges India antitrust probe in court: filing<\/em>, Reuters (Feb 10, 2020), https:\/\/www.reuters.com\/article\/us-amazon-com-india\/amazon-challenges-india-antitrust-probe-in-court-filing-idUSKBN2041EQ.<\/p>\n [16]<\/a> Id<\/em>.<\/p>\n [17]<\/a> Id<\/em>.<\/p>\n [18]<\/a> Id<\/em>.<\/p>\n [19]<\/a> Id<\/em>.<\/p>\n [20]<\/a> Katie Arcieri, Amazon could face antitrust suit in 2020, but asset breakup unlikely<\/em>, S&P Global (Jan 15, 2020), https:\/\/www.spglobal.com\/marketintelligence\/en\/news-insights\/latest-news-headlines\/56399662.<\/p>\n