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Amazon Loses Antitrust Ruling in Consumer ‘Fair Pricing’ Case

March 14, 2022, 4:39 PM

Amazon.com Inc. must face consumer antitrust litigation challenging “most favored nation"-style policies that have allegedly driven up the prices of “virtually all products offered for sale” online in the U.S., a federal judge in Seattle ruled.

Judge Richard A. Jones let the proposed class action move forward in the U.S. District Court for the Western District of Washington, where a group of consumers has accused Amazon of reinstituting its MFN rules—after pledging to abandon them—in the form of so-called “fair pricing” agreements.

Although some courts have signed off in the past on MFN-style price pacts, they were “distinct from the fair pricing policy at issue here,” which allegedly “requires sellers to add Amazon’s fees to the cost of their products” when selling them elsewhere, Jones said in a March 11 decision.

“Such a pricing provision could—and as plaintiffs allege, does in fact—raise the cost of products on external platforms that charge lower fees,” the judge wrote.

The ruling came days after a group of U.S. lawmakers asked the Justice Department to probe claims that Amazon representatives—potentially including CEO Jeff Bezos, the world’s second-richest man—may have lied to Congress in an effort to deflect antitrust scrutiny into its business practices.

The lawsuit’s allegations echo those from several other cases, including an enforcement action brought against the retail giant by the attorney general of Washington, D.C., and a multidistrict litigation challenging its dominance in the eBook market.

Amazon has defended the fair pricing rules—which require third-party merchants to make their Amazon prices the lowest they offer online—as pro-consumer. Far from raising price tags elsewhere, they actually give the company the opportunity to make sure its own stay low, it has argued.

Jones acknowledged March 11 that those arguments may ultimately prevail. But they’re for a later stage of the proceedings, the judge said.

He did, however, hand Amazon several victories. First, Jones threw out the suit’s most plaintiff-friendly legal theory, saying the MFN-style agreements aren’t the kind of price-fixing arrangement among direct rivals that’s a per se antitrust violation.

The suit challenges not “Amazon’s conduct as a competitor to its third-party sellers,” but the type of “vertical agreement between third-party sellers and their host platform” that’s subject to the rule of reason, which asks whether a pact was anti-competitive under all the circumstances, the judge wrote.

He also dismissed the suit’s state law claims, although he said about half of them can be refiled with additional specifics.

The consumers are represented by Hagens Berman Sobol Shapiro LLP, Keller Lenkner LLC, Quinn Emanuel Urquhart & Sullivan LLP, Keller Rohrback LLP, and Milberg Coleman Bryson Phillips Grossman PLLC. Amazon is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP.

The case is Frame-Wilson v. Amazon.com Inc., W.D. Wash., No. 20-cv-424, 3/11/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com