Antitrust Complaint Says Amazon Forces Merchants To Use Its Logistics Services

Merchant Accuses Amazon Of Forcing Price Hikes

An online merchant has written a letter to Congress saying that the company was forced to use Amazon’s logistics services, as it otherwise would have faced stiff penalties and possible suspension from the site. These moves made it necessary for the merchant to raise prices for its customers, according to a report by Bloomberg.

The 62-page-long letter talks about how Amazon is harming consumers, which is the general groundwork for an antitrust case. The letter accuses Amazon of tying in its logistics service with its marketplace, which would constitute an antitrust violation because a company can’t use its heft in one market to give itself an advantage in another.

“When it comes to Amazon’s dealings with third-party merchants, some of the conduct actually does lend itself to antitrust scrutiny,” said Hal Singer, an antitrust expert and Georgetown University adjunct professor retained by the merchant. “If you can connect the conduct to some measurable harm, in this case increased prices, that gets you into the antitrust ballpark.”

Amazon denied the accusations and said it does not penalize merchants for using other delivery options.

“Amazon has invested tens of billions of dollars in developing a world-class fulfillment network, and we offer that network to sellers at highly competitive fees when compared to other options available to sellers,” Amazon said. “In fact, our research shows other comparable options available to sellers are approximately 50 to 80 percent more expensive.”

The merchant, who did not want to be named for fear of hurting sales, said that Amazon continually raises logistics fees and that merchants can be penalized if they don’t choose Amazon for logistics and a package is late. With Amazon, there are no penalties for late packages. Other merchants say products that use Amazon’s logistics services are featured more prominently in search results.

Amazon controls about 70 percent of all online marketplace sales in the U.S.



Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.