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The United States Trade Commission's Lawsuit Against Amazon Inc

What's in the News? The United States Federal Trade Commission (FTC), alongside other regulatory bodies, has initiated legal action against the prominent online retail titan Amazon. The lawsuit contends that Amazon employs punitive and coercive methods to unlawfully sustain its monopoly position. Today's Article Highlights:

  • US FTC's Legal Action Against Amazon (Reasons, Amazon's Response)

  • India's Competition Laws (Legislation, About CCI, etc.)

Allegations Leveled Against Amazon: The United States Federal Trade Commission (FTC) and 17 state attorneys general have jointly filed a lawsuit against Amazon Inc. Amazon Inc. stands as an American multinational technology enterprise, specializing in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. The lawsuit asserts that the company's practices enable it to prevent competitors and sellers from reducing prices, diminish the quality of products for customers, overcharge sellers, impede innovation, and obstruct fair competition against Amazon. Furthermore, it alleges that Amazon engages in a pattern of "exclusionary conduct" that hinders the growth of existing competitors and the emergence of new ones. The anticompetitive actions are purportedly occurring in two markets:

  1. The online superstore market serving consumers.

  2. The market for online marketplace services used by sellers. These tactics encompass:

  • Anti-discount measures penalizing sellers and discouraging other online retailers from offering prices lower than Amazon.

  • Maintaining higher prices for products across the internet.

  • Linking sellers' eligibility for "Prime" status to their use of Amazon's costly Fulfilment service, which significantly increases the expense for Amazon sellers seeking to offer their products on other platforms. The FTC, alongside state partners, seeks a permanent injunction in federal court to bar Amazon from continuing its "unlawful conduct" and to restore competition.

Amazon's Response: Amazon has characterized the FTC's lawsuit as "misguided," asserting that if successful, it would compel the company to engage in practices that "actually harm consumers and the many businesses that sell in our store." India's Competition Legislation: Competition Act, 2002: The Competition Act, 2002, amended by the Competition (Amendment) Act, 2007, adheres to contemporary competition law principles. This legislation prohibits anti-competitive agreements, the abuse of dominant market positions by enterprises, and regulates combinations (acquisitions, control acquisitions, and mergers) that have or are likely to have a significant adverse impact on competition in India. The Competition Commission of India is the institution responsible for realizing the Act's objectives. About the Competition Commission of India (CCI): The Competition Commission of India (CCI) is a legally established body founded in March 2009 under the Competition Act, 2002. Its objectives include:

  • Eliminating practices detrimental to competition.

  • Promoting and preserving competition.

  • Safeguarding consumer interests.

  • Ensuring market trade freedom in India. Functions:

  • Safeguarding consumer interests in the marketplace.

  • Implementing policies outlined in the Competition Act, 2002.

  • Advocating and educating other governmental entities about the Competition Act, 2002, including state governments and ministries.

  • Promoting equitable and constructive competitive practices in the market.

  • Preventing the realization of anti-competitive agreements.

  • Collaborating with other regulatory agencies to enhance efficiency in maintaining a free and fair market.

  • Composition: The Commission comprises one Chairperson and six members, all appointed by the Central Government.

  • Powers:

  • The Competition Commission of India holds the authority to investigate certain agreements and the dominant positions of enterprises.

  • It can probe any acquisition or combination if it deems that such actions might negatively affect competition in the Indian market.

  • The Commission can establish its own procedural regulations.

  • It possesses the ability to impose financial penalties for violations of the Competition Act, 2002.

  • Additionally, it can issue interim orders pertaining to actions involving anti-competitive agreements or the abuse of market dominance, adversely impacting market competition.

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