The FTC has finally filed its long-awaited lawsuit against Amazon. However, the courts will likely find their argument wanting if the past is any indication. A key hurdle for the agency is that while leadership may want to avoid emphasizing the consumer, courts don’t. Showing consumer harm by a company almost universally loved by consumers will be challenging.
The crux of the FTC complaint takes place in two marketplaces with different recipients of the proposed harm. The consumer-centric case is focused on a marketplace defined as online superstores with concerns over price-parity requirements for sellers.
The pricing agreements require sellers to maintain price parity between Amazon and other retailers. Based on how courts handle similar contracts, known as Resale Price Maintenance (RPM) agreements, the FTC will likely need to show net consumer harm. RPMs have undergone a legal evolution regarding their per se violation status. If an action is a per se violation, then the judicial system doesn’t consider the context and the implications of the behavior when determining its legality.
Starting in the late 1970s, the Supreme Court began walking back years of per se precedent against RPM-type agreements. Combined, the cases State Oil v. Khan and Leegin Creative Leather Products, Inc. v. PSKS Inc. determined that maximum and minimum-price arrangements would not be considered illegal per see.
Read the full Real Clear Markets article here.
Tirzah Duren and Trey Price work on Tech and Antitrust policy for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.