Examining Amazon's Exclusionary Anti-Discounting Conduct and Its Impact on Price Competition

A. Amazon Maintains Its Monopolies In Both Relevant Markets Through Exclusionary Anti-Discounting Conduct That Stifles Price Competition

262. A core Amazon strategy is to limit one of the most fundamental avenues of competition: price competition. Amazon understands the importance of maintaining the perception among shoppers that it has the lowest prices. But in reality, Amazon relentlessly stifles actual price competition by punishing sellers who offer lower prices anywhere other than Amazon and disciplining rivals that undercut Amazon’s prices.

263. Amazon uses a variety of tactics to execute its anti-discounting strategy. At the foundation is Amazon’s sprawling price-surveillance group, the (redacted) which constantly crawls the internet for prices. Using this price-surveillance team, Amazon punishes third-party Marketplace sellers who offer lower prices on other online stores. Amazon imposes additional contractual obligations suppressing price competition on its most important sellers, backed up by the threat of even stronger penalties—including total banishment from Amazon’s Marketplace. Amazon also deters rivals from even attempting to compete with Amazon’s first-party Retail business on price by ensuring that rivals’ price cuts do not result in greater scale, only lower margins.

264. Combined, Amazon’s conduct quashes one of the most direct ways to compete with Amazon in both relevant markets: by offering lower prices. In an open, competitive environment, rival online superstores could attract more business by offering shoppers lower prices, and rival online marketplaces could attract sellers by charging them lower fees, allowing sellers to pass those savings on to shoppers via lower prices. Amazon suppresses this price competition by wielding its monopoly power to prevent sellers and retailers from offering lower prices off Amazon.

265. Without the ability to attract shoppers or sellers through lower prices, rivals are unable to gain a critical mass of either shoppers or sellers despite needing both to compete against Amazon. Further, by punishing sellers when there are lower prices off Amazon and disciplining rivals that try to compete on price, Amazon teaches shoppers not to look for lower prices off Amazon. Less comparison shopping again hinders rivals from gaining a larger consumer base. Amazon’s anti-discounting strategy therefore denies rivals the ability to gain scale, cements Amazon’s dominance in both relevant markets, and ultimately keeps prices higher than they would be in a competitive market.