District Of Columbia V. Amazon ' Is This A Market Of Everything?

• Published date: 11 January 2022
• Subject Matter: nti-trust/Competition Law, Antitrust, EU Competition
• Law Firm: Katten Muchin Rosenman LLP
• Author: Yonaton M. Rosenzweig

Author: Yonaton M. Rosenzweig¹

The District of Columbia filed a bold action in D.C. Superior Court alleging that Amazon.com, Inc. violated the District of Columbia Antitrust Act with respect to its practices related to Amazon's online store.² According to the District's complaint, Amazon is a monopolist in an alleged market for online marketplaces and it maintains and deploys that dominance to harm competition.

Amazon vigorously contests the allegations, and the matter is currently in the midst of a second round of motion-todismiss briefing, following the District's filing of an amended complaint in September 2021. If the District's claims are found plausible, Amazon's business model and its power in online sales will face close scrutiny in discovery, with tens of millions of pages of discovery likely produced to evaluate how Amazon's practices impact wholesalers and third-party sellers. If Amazon has its way, the amended complaint will be dismissed with prejudice, which will likely deter copycat actions across the country.

The Suit

On May 25, 2021, the Office of the Attorney General for the District of Columbia, represented by Hausfeld LLP, filed a four-count antitrust complaint against Amazon, alleging illegal horizontal agreements, vertical agreements, illegal maintenance of monopoly, and attempted monopolization. The first two claims were filed under D.C. CODE ' 28-4502 (D.C.'s analogue to Section 1 of the Sherman Act) and the latter two claims were filed under D.C. CODE ' 28-4503 (the District's analogue to Section 2 of the Sherman Act).

The action seeks an injunction, declaration of unlawful conduct, and unspecified civil penalties and damages "for the benefit of the District consumers."

On July 20, 2021, Amazon filed a motion to dismiss the complaint, which resulted in the District filing an amended complaint on September 10, 2021. The First Amended Complaint focuses the counts upon three Amazon contractual policies with third party sellers. The revisions remove references to "horizontal" and "vertical" characterizations of the challenged restraints and drop the allegation that these restraints are per se unlawful. The First Amended Complaint also adds anew count based on Amazon's contracts with wholesalers.³

The Three Amazon Policies at Issue

The gravamen of the District's complaint is that Amazon wields three anticompetitive policies that "force" its wholesalers and third-party sellers into adjusting their pricing policies elsewhere on the Internet, to the detriment of consumers and the suppliers themselves. The Price Parity Provision'which was in effect until two years ago'required Amazon Third Party Sellers (TPSs) to commit not to sell their products on any other web-based marketplace for a lower price than the price they charge when selling those same products on Amazon. The Fair Pricing Policy'which is in effect today' requires TPSs to commit not to charge "significantly higher prices" on Amazon compared to the same products for sale elsewhere. The District refers to these two policies, collectively, as the "Most Favored Nations" or MFN policies.⁴

The last challenged policy is called the Margin Maintenance Agreement (MMA), which applies where Amazon purchases a product at wholesale and resells it at a price...