US Unlikely To Copy EU's Antitrust Charge Against Amazon — Antitrust Lawyer

The European Union's reported plan to bring antitrust charges against Amazon.com Inc. AMZN for allegedly using third-party sellers' data to unfairly compete against them is unlikely to be copied in the United States because of the differences in the two antitrust regimes, a U.S.-based antitrust attorney said Thursday.

The 1957 Treaty of Rome, which created the forerunner of the EU known as the European Economic Commission, gave European regulators broad authority to crack down on "abuse of dominance" by market leaders, Donald I. Baker said. Typically, this has led to significant fines against the companies being investigated, said Baker, who runs a Washington-based law firm. By contrast, U.S. antitrust law, as codified by the 1890 Sherman Act, gives dominant companies far more latitude in how they manage their positions in the market, he said. 

The Sherman Act, Baker said in an email, does not prohibit a dominant company from charging monopoly prices or exploiting the market in other ways. U.S. law only bans conduct found to exclude its rivals from competing in the monopolized market, he said.

Under U.S. law, having market dominance "still doesn't stop you from doing bad things," said Baker, who teaches a course examining the differences between U.S. and EU antitrust regulations at George Washington University in Washington. Because the U.S. lacks the EU's firepower in pursuing companies for alleged abuse of dominance, it is doubtful the Trump administration would, under current law, succeed in bringing a similar case against Amazon, he said. 

Earlier Thursday, it was reported that the European Commission, the EU's antitrust arm, was poised to charge Amazon with hindering competition by using data collected from third-party merchants to effectively compete against them. A draft of the charges is expected to be made public within the next two weeks, according to a report in The Washington Post. It would be the first such charge ever brought against Amazon in its 26-year history, and it underscores concerns of European regulators that IT giants such as Amazon, Google GOOG and Facebook FB leverage their enormous platforms to damage rivals and limit consumer choice. Amazon did not respond to a request for comment.

President Donald Trump holds an intense dislike for Amazon founder, Chairman and CEO Jeff Bezos, due mostly to the coverage of his administration in The Washington Post, which Bezos owns. Trump has gone so far as to blame the U.S. Postal Service's (USPS) long-running financial woes on the low parcel rates it charges Amazon. Trump has threatened to withhold any future pandemic-related relief funding for USPS unless it quadruples its parcel rates. Many parcel experts believe that Trump's claims are ludicrous, noting that Amazon actually pays USPS more to move its goods than it would cost on Amazon's network. Such a drastic jump in parcel prices would lead Amazon, USPS' largest shipping customer, to take most of its shipping business in-house, experts said. It would also wreak havoc on small to midsize e-merchants who have long relied on USPS' low rates to offer low-cost or free shipping to consumers, they added. 

Brittain Ladd, an e-commerce consultant who worked at Amazon from 2015 to 2017, said the company would not be a target of U.S. antitrust regulators because it controls just 4% of the total U.S. retail market. Ladd shrugged off the EU's allegations, saying there is nothing wrong with a company assessing other products with the objective of making a better one. 

"I'm sure Amazon does use data to identify products it can create and sell through their private label business," Ladd said. "However, it can do this regardless if a seller lists and sells their product on Amazon or on any number of other marketplaces." He characterized the EU's case as "weak."

For Amazon, the long-term risk is whether it will get caught up in the broad global backlash against market concentration by IT companies. "It's unclear if Amazon is breaking any EU laws right now," said James Thomson, a consultant who helps businesses sell on Amazon. "But many people in the EU and U.S. think Amazon has developed too much power for itself, so laws may need to be updated, making some of the current actions by Amazon no longer allowed."

Baker, the antitrust attorney, said the likely outcome of the EU action is that Amazon will agree to pay a hefty fine in exchange for settling the charges.