Dirk Auer on California’s Suit Against Amazon

Legal Newsline – ICLE Director of Competition Policy Dirk Auer was quoted by Legal Newsline in a story about California Attorney General Rob Bonta’s suit charging Amazon for pushing merchants on its platform to charge the lowest prices available. Read the full piece here.

“What it reflects is an attempt by enforcers to show they are doing something against Big Tech and increasing their popularity by taking on these companies,” said Dick Auer, director of competition policy at the International Center for Law and Economics, a research organization that advocates for free-market policies.

…Amazon argues California is trying to twist antitrust law by placing it on the same plane as third-party merchants on its site to create a picture of so-called “horizontal” collusion. But a federal court looking at similar claims ruled that Amazon is in a “vertical” arrangement with sellers, selecting the conditions under which they can offer products on its platform. And courts for decades have protected such arrangements against antitrust lawsuits, Auer of ICLE said, most commonly in minimum-price agreements manufacturers impose on retailers.

Courts have upheld minimum-price rules because they force retailers to compete on service instead of price, Auer said, reducing the risk customers will come away unsatisfied after a purchase. Amazon argues its policy of promoting low-price merchants is also a reasonable way to serve consumers looking for the best deal.

Amazon’s critics point to European antitrust law, which is less consumer-centric and has prohibited online merchants from offering low-price guarantees. Unfortunately, Auer said, studies of markets with and without such bans show they didn’t actually impact the prices consumers pay.

California has little chance of winning on claims the thousands of merchants selling products on Amazon.com are engaged in a vast horizontal conspiracy to raise prices everywhere else, Auer said. And after all the investigating AG Bonta’s office did, he said, one would expect more concrete evidence.