Amazon Wins Dismissal of State Claims in FTC’s Monopoly Lawsuit

A judge dismissed state consumer protection claims against Amazon Inc. as part of a Federal Trade Commission monopoly lawsuit.

Amazon won dismissal of claims from New Jersey and Pennsylvania that accused the retail giant of unfair commercial practices and deception under state consumer protection laws, according to a Thursday opinion from the US District Court for the Western District of Washington.

The states claimed that Amazon violated their laws by using Project Nessie, an algorithm-predicting competitor price changes and inflating prices without consumer awareness.

However, they failed to prove their allegations that Amazon violated their consumer laws by not disclosing its use of the algorithm and that it made misleading statements in its price matching policy, Judge John H. Chun concluded.

“Consumers may not find lower prices because other online stores match Amazon’s prices. But this results from broader market forces, not conduct that plausibly has the capacity to mislead consumers who lack ‘real bargaining’ power,” Chun wrote in the ruling.

New Jersey and Pennsylvania alleged that Amazon discovered in the early 2010s that when it raised prices, other online competitors would follow. To boost profits, Amazon started to use Project Nessie in 2014 to focus its price increases on products that were also sold by online stores likely to match their prices.

The states argued that when the online stores matched Amazon’s price increases, shoppers were less likely to notice they were paying inflated prices. Amazon temporarily deactivated Project Nessie during periods of heightened media attention and customer traffic, only to reactivate it later to recoup lost profits, according to the court filing.

The claims stem from a lawsuit filed by the Federal Trade Commission and various states in 2023, accusing Amazon of violating federal and state antitrust laws, as well as state consumer protection laws, by monopolizing online marketplace services.

The company was also accused of coercing sellers on its platform to use its logistics and delivery services in exchange for prominent placement and of penalizing merchants who offered lower prices on competing sites.

The court dismissed New Jersey and Pennsylvania’s claims in September 2024 but allowed them to amend and refile. After the initial dismissal without prejudice, Pennsylvania requested the court to reconsider its decision, but the court denied the request.

The states then filed a second amended complaint in October, revising their earlier claims and, in New Jersey’s case, adding a new claim that Amazon was knowingly hiding important information, according to the court filing.

Amazon is represented by law firms including Williams & Connolly and Covington & Burling LLP.

The case is FTC v. Amazon.Com, Inc., W.D. Wash., No. 2:23-cv-01495-JHC, opinion 3/20/25.