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CT joins FTC in suing Amazon for alleged monopoly in online retail

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CT joins FTC in suing Amazon for alleged monopoly in online retail

Sep 26, 2023 | 5:16 pm ET
By Erica E. Phillips/CT Mirror
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Connecticut Attorney General William Tong said the state is helping lead a lawsuit alleging Amazon illegally maintains monopoly power. ERICA E. PHILLIPS / CT MIRROR
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Connecticut Attorney General William Tong said the state is helping lead a lawsuit alleging Amazon illegally maintains monopoly power. ERICA E. PHILLIPS / CT MIRROR

Connecticut is taking a leading role in a federal lawsuit against online retail behemoth Amazon, alleging the company illegally maintains monopoly power, stifling competition on prices and quality and causing harm to consumers and small businesses.

State Attorney General William Tong announced Tuesday afternoon that Connecticut is one of 17 states that have joined the Federal Trade Commission in suing Amazon, adding that lawyers with his office, alongside the Pennsylvania and New York attorneys general, are leading the prosecution on behalf of the states. 

“Amazon is unquestionably dominant as a superstore, as an online marketplace,” Tong said at a press conference. “And let me be clear, that is not a crime. But what is illegal is for Amazon to use its dominance to punish and shut down its competitors, to kill competition and eliminate choice for customers like all of us and our families.”

The FTC announced the legal action earlier Tuesday, pointing to certain practices it deems “anticompetitive.” Those include the way Amazon allegedly deters sellers on its platform from offering lower prices than the retailer’s by pushing those sellers further down in search results.

The complaint also alleges the company effectively forces sellers on its platform to use Amazon’s own proprietary fulfillment services, which can make it more expensive for those businesses to sell on Amazon, giving the retailer an advantage. “Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition,” FTC Chair Lina M. Khan said in a statement.

In a statement, Amazon General Counsel David Zapolsky called the lawsuit “wrong” and criticized the FTC, saying the agency’s “focus has radically departed from its mission of protecting consumers and competition.” Zapolsky said the practices highlighted in the complaint have actually spurred competition and innovation in retail “and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.”

Zapolsky added: “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do.”

For over a decade, Connecticut has largely supported Amazon’s expansion in the state. The company’s fulfillment operation now has nine locations in the state, and it counts roughly 5,000 Connecticut-based independent sellers using its platform. State officials meet regularly with Amazon leaders and have fast-tracked permits for several of its facilities.

Amazon’s facilities in Connecticut employ more than 15,000 people, often paying well over the state’s minimum hourly wage. Around this time of year, the company typically ramps up hiring for the busy holiday season, adding hundreds — sometimes thousands — of additional temporary jobs.

The state has fostered that growth, providing millions of dollars in tax incentives to Amazon as it built out its fulfillment network in recent years. According to state data, Connecticut has paid more than $20 million in incentives to the company since 2013. 

Last year, Amazon hosted hundreds of small businesses at a daylong forum at the Connecticut Convention Center, intended to identify a more diverse group of companies for Amazon’s own procurement of goods and services.

David Lehman, then-commissioner of the Department of Economic and Community Development, spoke at the event. His former deputy Glendowlyn Thames now leads economic development and policy efforts for Amazon in Connecticut and New York.

But Tong made a distinction Tuesday between supporting Amazon’s business in the state and suing the company over alleged monopoly practices. 

“I love Amazon. I’m on it almost every day. … It’s easy, it’s quick, it’s convenient, and in most cases, I feel like I’m getting a good price,” he said. “It gives us access to a universe of products, really a global marketplace, and it seems to give small businesses from all over Connecticut, all of this country, and all over the world, an opportunity to sell to me and my family.”

But, he said, “Just because Amazon is great, and in many ways wonderful and convenient, doesn’t mean Amazon can break the law.” 

Tong said he “honors” all of the Connecticut residents who work at Amazon, but noted “they’re consumers, too.” He said, “When I bring a case like this, it’s for them.”

CT Mirror data reporter José Luis Martínez contributed to this story.