NH attorney general signs on to Amazon suit

Amazon's illegal, monopolized power over small businesses at center of lawsuit

New Hampshire is one of 17 states suing Amazon.com, Inc., according to state Attorney General John M. Formella. The suit alleges the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The complaint alleges Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation and prevent rivals from fairly competing against Amazon.

“We are suing Amazon on behalf of New Hampshire’s consumers and small businesses alike. Amazon’s ongoing pattern of illegal conduct takes advantage of shoppers and undermines small businesses throughout the Granite State,” Formella said, according to a news release.

“We have seen Amazon illegally work to stifle competition online and use its monopoly power to force small businesses into paying enormous fees while inflating the prices they are charging consumers. Our aim is to help enhance New Hampshire entrepreneurship by working to restore a fair, open and competitive online economy for all Granite Staters.”

The complaint alleges Amazon violates the law not because of the company’s size, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection and quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and third-party sellers, Amazon ensures no current or future rival can threaten its dominance. Amazon’s far-reaches impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small, and affect over 100 million shoppers nationwide.

The complaint largely focuses on Amazon’s anticompetitive conduct with third-party “sellers,” small and large businesses that sell products on Amazon’s platform. Many New Hampshire small businesses rely on Amazon to reach customers and to stay in business. However, sellers are charged costly fess, which when all combined, amount to close to 50% of their total revenues to Amazon. These fees harm not only these businesses but also consumers, who pay increased prices for thousands of products sold on or off Amazon. These high fees are possible because of Amazon’s anticompetitive tactics to illegally maintain its monopoly power.

Amazon’s policies punish sellers and deter other online retailers from offering lower prices, which keeps prices higher for products across the internet. For example, if Amazon discovers a seller is offering lower-priced goods elsewhere, including a businesses’ own website, Amazon can bury these sellers so far down in search results that they become effectively invisible to consumers.

Policies condition sellers’ ability to obtain “Prime” shipping eligibility for their products — a virtual necessity for doing business on Amazon. When sellers use Amazon’s costly fulfillment service, it makes it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

The 17 states and the Federal Trade Commission are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.

Other states involved in the suit are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island and Wisconsin.

This article is being shared by partners in The Granite State News Collaborative. For more information, visit collaborativenh.org.