A top US antitrust regulator is suing online retail giant Amazon. The Federal Trade Commission (FTC) has accused the company of running an illegal monopoly by strong-arming sellers and stifling potential competition. The FTC is joined by 17 US states in the case.
Separately, the company has been beset with controversy whilst its unfair treatment of workers remains in the news. The FTC’s lawsuit was announced just days after an Amazon employee in Swansea died following an incident at work.
FTC chair Lina Khan said:
Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies
2. The complaint details a set of allegations spanning a variety of unlawful tactics by Amazon.
Amazon deploys all of these tactics to pursue a common overarching goal: deprive rivals of the scale needed to meaningfully compete against Amazon.https://t.co/2H2PLHNacT
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— Lina Khan (@linakhanFTC) September 26, 2023
Amazon’s restricted market
The FTC said Amazon broke antitrust laws in two ways. Both of these involve Amazon’s ‘marketplace’, which links outside sellers to buyers through its platforms.
Khan explained Amazon’s monopoly in a thread on Twitter:
5. Having gained its own critical mass of both shoppers and sellers, Amazon set out to deny both current and would-be rivals the ability to do the same.
The complaint identifies two sets of tactics Amazon deploys to suppress competition and maintain its monopolies.
— Lina Khan (@linakhanFTC) September 26, 2023
In the first instance, the case alleges that Amazon punishes sellers using its platform that sell items elsewhere at lower prices. It does this by downranking their products on the site.
Secondly, the case holds that Amazon coerces sellers into signing on to its “costly” logistics service. Sellers must do this in order to be exposed to Prime customers, who are the site’s biggest and most catered-to users, the FTC said.
John Newman, deputy director of the FTC’s Bureau of Competition, said:
Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers…
Seldom in the history of US antitrust law has one case had the potential to do so much good for so many people
Amazon said it firmly rejected the premise of the case.
Understandably, however, small business groups have welcomed the lawsuit and are backing the case. Co-executive director of the Institute for Local Self-Reliance Stacy Mitchell said:
Ecommerce should be a dynamic sector with numerous marketplaces vying to attract both sellers and shoppers. Instead, it’s utterly dominated by a single firm
The workers’ fight
In August, Amazon workers in Coventry went on strike demanding a pay rise from £11 to £15 an hour. The company had offered an increase of 50p per hour.
However, as the Guardian reported, this offer:
angered workers who have complained of a high-pressure working environment – exacerbated by online orders surging during the Covid pandemic.
Garfield Hylton, who works for Amazon in Coventry, said:
They can monitor you, per minute, per task – it’s micromanagement.
It’s called ‘scanner adherence’ – you have to be scanning every minute, to show a constant, rapid scan.
In the UK, strikes on 4 August marked a year of industrial action against the company.
Similarly in the US, workers in Pontiac, Michigan announced strikes in June during ‘Prime week’, after submitting a petition for better conditions in October 2022. A press release from the labour organisation Teamsters said:
The Pontiac workers delivered a petition to Amazon management in October 2022 demanding changes to their working conditions. Amazon revoked a previous peak-season pay increase. Workers suffer injuries from heavy packages and quickly moving conveyer belts. If they are just a few minutes late for a shift, Amazon deducts a whole hour of their earned unpaid time off. The workers marched on management and wore buttons calling for improvements.
Instead of fixing the problems, Amazon committed unfair labor practices, including retaliating against an injured worker who had helped lead the petitioning and march and also refusing to provide reasonable accommodations.
On 20 September, an unidentified employee was taken to hospital following an accident at the ‘CWL1’ Ffordd Amazon site in Swansea. He died shortly afterwards.
Furthermore, two workers from Amazon’s warehouses in Fort Wayne, Indiana and Joliet, Illinois respectively died in 2023. This follows five work-related deaths of the company’s warehouse employees in the US in 2022.
Featured image via Fox 2 Detroit – screengrab
Further reporting via Agence France-Presse
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