Defendant Amazon operates the largest online retail marketplace in the United States. Amazon sells its own goods, but also designed its marketplace to be a platform where third-party merchants can register and list their goods for Amazon to sell. Amazon is critical to the financial success of its third-party merchants. Almost half of the third-party merchants who list their goods on Amazon’s marketplace generate between 81% and 100% of their revenues on it. Amazon competes both (a) as a retailer against the third-party merchants that list their goods on Amazon’s marketplace, and (b) as a marketplace, against other online retail marketplaces, such as eBay and Walmart, where third-party merchants can list their goods. The Amended Complaint asserts that Amazon charges higher fees for third-party merchants than competitor marketplaces and that these inflated fees are passed on to customers like Plaintiffs through higher prices. In a competitive market, third-party merchants would be able to sell their products for less in competitor marketplaces. Amazon bars this type of competition by imposing on third-party merchants Platform Most Favored Nation policies, or did so during the relevant time period. Amazon’s MFN policies forbid third-party merchants from listing their goods anywhere else on the internet at prices lower than their Amazon list prices.
“Amazon’s first argument for dismissal is that its MFN policies are legal as a matter of law. Amazon recharacterizes the policies found in the Amended Complaint as a Retail Competitive Price Provision and an Anti-Gouging Policy. Amazon argues that its policies provide for competitive prices to consumers, rather than for itself and that no court has ever condemned competitive price policies like these. The fact that no Court has ever found a policy like these to violate the Sherman Act does not, in itself, render these claims implausible….
“Amazon’s second point is that the First Cause of Action fails to allege any concerted action. It argues courts routinely dismiss Section 1 claims where the claim rests only on one party’s establishment or enforcement of contract terms or policies that another party is required to follow.” Plaintiff respond that: “Amazon’s MFN policies are neither vertical price restraints (they do not place conditions on the resale of Amazon’s own products), nor intrabrand price restraints (they restrain competitive pricing across all brands and unbranded goods that third-party merchants sell on Amazon’s platform, even though produced and supplied by companies other than Amazon). Put simply, Amazon and each third-party merchant has entered into a horizontal price-fixing agreement that controls how third-party merchants set prices for goods that directly compete with Amazon’s goods. The merchants participate in this conduct – albeit unwillingly – by setting prices in compliance with the agreed-upon price restraint. This conduct plainly satisfies the requirement of a concert of action under Section 1.” For the purposes of the motion to dismiss, the Court agreed with Plaintiffs: “Taking the facts in the light most favorable to Plaintiffs, the third-party merchants are active participants who set their prices and otherwise engage with Amazon’s policies in an active, albeit allegedly unwilling, way. This affects horizontal competitors in a unique way not analogous to the cases cited by Amazon.”
With respect to antitrust injury, “Plaintiffs’ allegations, although complicated, are not as complicated as Amazon would have it and are not too attenuated to plausibly allege antitrust injury. In the light most favorable to the nonmoving party, this causal chain could be summarized as Plaintiffs put forth in their Response brief: Amazon’s MFN policies restrain competition in ways that cause consumers to pay supra-competitive prices directly to Amazon. Plaintiffs argue that Amazon’s argument that third-party merchants make ‘independent pricing decisions’ also defies the CAC, which alleges that Amazon uses its MFN policies to block third-party merchants from making truly independent pricing decisions. Plaintiffs’ point is plausible.
“Finally, Amazon contends that Plaintiffs’ injuries arise from ‘conduct in a different market’, i.e. Plaintiffs paid supra-competitive prices for retail goods based on Amazon’s actions in a different market toward different actors – policies applied and fees charged to third-party sellers…. The Court finds that Plaintiffs allege a valid injury here, even if third-party merchants also have their own cause of action for lost profits.”
DeCoster v. Amazon.com Inc., No.21-693, 2023 U.S.Dist.LEXIS 12365 (W.D.Wash. Jan. 24, 2023).