Judge Dismisses Amazon Lawsuit But Plaintiffs Can Still Fight Back
A Seattle federal court dismissed a class-action antitrust lawsuit claiming Amazon violated the Sherman Act by steering consumers toward sellers who paid for the company’s Fulfillment by Amazon (FBA) services, even if their prices were higher than non-FBA sellers.
Amazon Prime member Angela Hogan filed the lawsuit in July 2021, alleging that the e-commerce giant’s actions caused third-party sellers to stick consumers with higher prices to offset the “supra-competitive costs” of FBA, as well as the tech titan’s own price increases.
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Like many of the recent antitrust lawsuits levied by the U.S. and the E.U., a major point of contention Hogan brought up is Amazon’s “buy box,” which maximizes product visibility near the top-right section of the page and aims to encourage people to quickly check out. In the suit, Hogan accuses Amazon of tying placement on the buy box to sellers’ use of FBA, citing the approximately 85 percent of the top 10,000 Amazon sellers—and 73 percent of sellers worldwide—that use FBA.
The plaintiffs allege that linking product placement in the buy box with FBA forces sellers to buy Amazon fulfillment services. The complaint said Amazon wielded “monopoly-level power” to “destroy” competitors in retail warehousing, packing and shipping.
“In sum, Amazon’s unlawful use of its monopoly-level power has given it an edge in the logistics market, forced sellers to pay supra-competitive prices for fulfillment services, and increased prices for plaintiff and other consumers who shop on Amazon.com,” the complaint said. “Amazon’s unlawful tying scheme harms hundreds of thousands of businesses and hundreds of millions of consumers. The only winner is Amazon, which earns billions as a result of its uncompetitive conduct while continuing to gain economic power in all markets it enters.”
But according to the April 20 ruling of U.S. district judge Ricardo S. Martinez, the court found that plaintiffs “lack antitrust standing” to bring the monopolization claims. Martinez also said that the plaintiff failed to allege antitrust injury when it comes to competition in the logistics market since end consumers aren’t purchasing fulfillment and logistics services, but retail goods.
Martinez gave the plaintiffs 30 days to file a revised complaint. The case will close if they fail to amend the complaint.
Amazon declined to comment on the lawsuit.
Terrell Marshall Law Group, the legal counsel representing the plaintiffs, did not immediately respond to Sourcing Journal’s request for comment.
The plaintiffs had asked for unspecified monetary damages and a court injunction to “prohibit Amazon from continuing its unlawful conduct.”
Ahead of the ruling, Amazon’s attorneys argued that fulfillment services are sold not to consumers who buy products but to third-party businesses selling goods on the company’s platform. In a court filing, Amazon said the plaintiff’s complaint “suffers from myriad fatal legal defects,” adding that because plaintiffs do not allege that they purchased the allegedly tied product—FBA—they cannot possibly have suffered antitrust injury.
The judge’s ruling said the plaintiffs were not buyers of logistic services, the “allegedly monopolized product” at issue in the lawsuit, and that plaintiffs “are at best indirect purchasers precluded from bringing antitrust claims.”
If the result does in fact hold up pending any amended complaints, it would follow the way of a high-profile government legal battle that failed to tie the e-commerce giant to anticompetitive behavior. Washington D.C. Attorney General Karl Racine sued Amazon in 2021 for what he alleged were anticompetitive pricing agreements across both the company’s third-party sellers and first-party, wholesale suppliers.
The suit was unsuccessful, with the judge in that case saying that there was no evidence supporting the claim that the company inflated prices for consumers.
A lawsuit levied by California Attorney General Rob Bonta in September is currently ongoing, with the Golden State also accusing Amazon of stifling retail price competition. In March, a judge rejected Amazon’s bid to dismiss that suit.
In general, U.S. lawsuits have all proven futile against Amazon’s business practices despite efforts by the House of Representatives, which has introduced different bills designed to ban the company from effectively selling its own branded products and competing products on the same marketplace.
The global stage, however, has been a different story. The European Commission’s two-year probe into Amazon’s business practices resulted in notable company changes, including the addition of two-click Prime cancellation and a second buy box for independent sellers. The company also agreed to stop using non-public seller data to the benefit of its retail operations, long been a top criticism of the company around the globe.
Amazon is also currently facing a $1 billion class action lawsuit in the U.K., which claims the company ensures that the buy box nearly always features goods sold directly by Amazon itself, or by third-party sellers who pay to use the FBA business.
The U.K.’s Competition and Markets Authority has not sued Amazon, but has investigated the company since last July.
