No Discounts Allowed: Reviewing Amazon's Price Control Playbook

c. Amazon’s anti-discounting strategy prevents rivals and sellers from offering lower prices and deprives rivals of scale necessary to compete

305. By suppressing competition in the online superstore and marketplace services markets, Amazon’s anti-discounting strategy artificially inflates prices. Shoppers and sellers pay more, and Amazon reaps the benefits.

306. Amazon’s one-two punch of high fees and seller threats forces sellers to use their inflated Amazon prices as a price floor everywhere else they sell online. As a result of Amazon’s conduct, shoppers often have no choice but to pay at least the price in Amazon’s Buy Box even when they buy online somewhere other than Amazon.

307. Sellers generally price their goods to at least cover their costs, including fees charged by online marketplace services providers (such as those discussed in Part IV, above). Thus, the seller’s shopper-facing price depends on the amount of fees charged by different marketplaces.

308. As discussed in Part V.D.3, above, the cost of doing business is higher on Amazon than on other marketplaces—and Amazon has steadily hiked the fees it charges sellers, (redacted)

309. Because Amazon has steeply raised its fees, sellers need to charge higher prices on Amazon than they would on a less-costly marketplace to make the same per-unit profit. Amazon’s high fees should present other online superstores with an opportunity that would make shoppers, sellers, and themselves better off: if those superstores can offer sellers lower fees, sellers could offer shoppers lower prices while making the same or a higher profit margin, which should cause shoppers and sellers alike to flock to the less-costly online store.

310. Amazon has destroyed this competitive dynamic by algorithmically forcing sellers to ensure that their prices off Amazon are no lower than their prices on Amazon, regardless of the relative costs. Similar anticompetitive effects flow from ASB, which contractually prevents brands from offering lower prices elsewhere online even when it would be profitable for them to do so, including on their own websites.

311. Amazon internally recognizes that (redacted)

312. (Redacted) For instance, one seller told Amazon that (redacted) Sellers have also complained to Amazon “that [Buy Box disqualification] encourages Sellers to raise their prices on competitor websites.”

313. One Amazon seller (redacted)

315. Amazon understands that its anti-discounting strategy generally does not have the effect of lowering prices on Amazon because sellers must pay the high fees charged by Amazon. A 2017 Amazon internal memo observed that Buy Box disqualification “has not led Sellers to lower their prices” and “has not motivated Sellers to reduce prices.” (redacted)

316. The primary and intended effect of Amazon’s anti-discounting strategy is that sellers do not offer lower prices off Amazon even if other online marketplaces offer sellers lower costs.

317. This effect is intensified for sellers subject to ASB. While Amazon’s algorithmic anti-discounting punishment focuses on individual products, Amazon’s enforcement of ASB threatens an ASB seller’s ability to sell anything at all as a third-party seller on Amazon’s Marketplace. ASB’s threatened contractual punishments could therefore effectively cut off a huge channel for sellers. In that way, ASB is broader in scope than any particular instance of Amazon’s algorithmic third-party punishment, making it even more likely that Amazon’s punitive program deeply chills discounting by ASB sellers off Amazon.

318. (Redacted) The force and fear of Amazon’s tactics are so strong that actual punishment is often not necessary. The threat alone can be enough.

319. For example, (redacted) Amazon’s anti-discounting punishments also limit the extent to which sellers sell on other online marketplaces, where sellers can control the final prices offered to customers. (redacted)

320. Amazon’s anti-discounting conduct reverberates throughout both relevant markets because of Amazon’s dominance in each market. For example, (redacted) However, (redacted)

320. (Redacted)

321. (Redacted)

322. (Redacted) This is not a healthy, competitive market.

323. (Redacted)

(This info is Redacted)

324. In total, Amazon’s anti-discounting conduct helps maintain Amazon’s monopolies by stifling competition relevant markets, denying scale to rivals, harming sellers, and depriving shoppers of lower prices.