US: Amazon is accused of forcing up prices for independent merchants

In a letter sent to federal lawmakers, an online merchant has accused Amazon of forcing him and other sellers to use the company’s expensive logistics services, which in turn forces them to raise prices for consumers, reported Bloomberg. 

The 62-page document lays out an antitrust case that emphasizes harm to consumers, the traditional basis for such cases in the US. Until now, antitrust experts have suggested that Amazon was not vulnerable to such an argument and that regulators would need to find another way if they wanted to restrain the company’s growing market power.

The complaint, based on an analysis of thousands of Amazon transactions over several years involving more than 100 products, turns all of that thinking on its head. It accuses Amazon of “tying” its marketplace and logistics services together, an antitrust violation in which a company uses dominance in one market to give itself an advantage in another market where it’s less established. The letter refers to previous Supreme Court rulings on tying, including one against Kodak in 1992 that said the photocopier manufacturer violated antitrust laws by forcing customers who bought its machines to also use its parts and repair services.

“When it comes to Amazon’s dealings with third-party merchants, some of the conduct actually does lend itself to antitrust scrutiny,” said Hal Singer, an antitrust expert and Georgetown University adjunct professor retained by the merchant to work on the analysis. “If you can connect the conduct to some measurable harm, in this case increased prices, that gets you into the antitrust ballpark.”

Full Content: Bloomberg

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