Lina Khan’s Amazon Antitrust Paradox

The FTC Chair says booksellers undercut her lawsuit’s core claim

WSJ editorial. 

"The Biden Administration’s antitrust policy is an intellectual and legal mess these days, and look no further than the Federal Trade Commission’s curious move last week to oppose booksellers that want to join its lawsuit against Amazon. FTC Chair Lina Khan doesn’t want the booksellers contradicting her arguments in court.

The American Booksellers Association (ABA) is seeking federal Judge John Chun’s permission to intervene in support of the FTC lawsuit. The independent bookseller group says Amazon unfairly leverages its size to negotiate better deals with publishers. As a result, Amazon sells books at low prices that they struggle to match. “We believe the facts we bring to the table will significantly bolster key arguments made by the FTC in their already strong and compelling case,” says ABA CEO Allison Hill.

Strange but true, Ms. Khan doesn’t want those allies. The booksellers’ intervention “would essentially create a ‘whole new suit’” because their claims are “different from those in this case,” the FTC wrote last week in a brief opposing the ABA’s request. Translation: Booksellers contradict the FTC’s arguments.

Start with their conflicting views of market competition. The FTC narrowly defines the market in which Amazon competes as “online super stores”—namely, Walmart, Target and eBay—to argue that it has monopoly power. But small booksellers rightly argue that they also compete with Amazon. As do thousands of other retailers.

Booksellers also say that Amazon sells books at lower prices than they can. Yet the FTC claims that Amazon raises retail prices. How? Allegedly by requiring third-party sellers to sell goods on its site at their lowest available price to appear in its so-called “buy box.” The FTC claims third-party sellers must then raise their prices on other sites.

On one hand, booksellers argue that Amazon uses its clout to obtain and sell books at lower prices, forcing them to cut their own prices. On the other, the FTC says Amazon uses its market power to block other businesses from selling at lower prices. Who’s right?

Ms. Khan essentially agreed with the booksellers in her ballyhooed 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox.” She then argued that Amazon unfairly undercut small competitors by “deeply cutting prices.” Her switcheroo now amounts to a concession that reducing prices isn’t a violation of modern antitrust law, which prioritizes consumer welfare.

The Chair’s problem is that most evidence contradicts her claims that Amazon raises prices. What does it say when her own supporters disagree with her dubious legal theories?"