Mar 11, 2019

Amazon to end price practice critics said could violate antitrust law

Amazon CEO Jeff Bezos. Photo: Matt Winkelmeyer/Getty Images for WIRED25

Amazon will no longer tell third-party merchants that sell products on its platform in the United States that they cannot offer the same goods for a lower price on another website, according to a person with direct knowledge of the company's decision.

Why it matters: Critics have said the so-called "most favored nation," or "price parity," provisions could violate antitrust law. But even without them, the company still faces a broader set of attacks on its size and power in the United States and around the world.

Flashback: Sen. Richard Blumenthal (D-Conn.) in December asked the Department of Justice and the Federal Trade Commission to investigate the requirements for possible antitrust violations late last year.

  • Blumenthal said he was concerned that they could "stifle market competition and artificially inflate prices on consumer goods."
  • His request followed a May law review article that found that the most favored nation requirements "employed by online platforms can harm competition by keeping prices high and discouraging entry" in many cases.
  • Amazon dropped the requirement for merchants on its platform in Europe under regulatory pressure in 2013.

What they're saying: "Amazon’s wise and welcome decision comes only after aggressive advocacy and attention that compelled Amazon to abandon its abusive contract clause," Blumenthal said, while issuing a wider call for antitrust investigations into large tech companies.

  • Amazon declined to comment on the change.

The big picture: Amazon has become a symbol for progressives of the ill effects of corporate power in an age of increasing consolidation. Last week, 2020 presidential candidate Sen. Elizabeth Warren (D-Mass.) said Congress should pass a law banning large companies from operating and owning participants on the same online platform.

  • That proposal would make it impossible for Amazon to sell its house brand products, like the popular AmazonBasics batteries, that critics say hurt other brands that sell on its platform.

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