Western District Of Washington Trims Some Claims, Keeps Others, In Most-Favored-Nation Litigation Against Amazon
04/18/2023On March 23, 2023, the United States District Court for the Western District of Washington partially granted and partially denied Amazon’s motion to dismiss a putative consumer class action alleging Amazon’s policies have prevented third-party sellers from offering lower prices on other e-commerce platforms. Frame-Wilson, et al. v. Amazon.com, Inc., No. 2:20-cv-00424-RAJ, 2023 WL 2632513 (W.D. Wash. Mar. 23, 2023).
Twenty-one e-commerce consumers brought this case, claiming that three Amazon policies have caused supracompetitive prices on other e-commerce platforms. Plaintiffs alleged that (1) Amazon imposes higher costs on third-party sellers than other e-commerce platforms, (2) until a threatened FTC investigation ended the practice in March 2019, Amazon imposed a most-favored-nation clause requiring third-party sellers to provide at least as favorable terms to Amazon customers as they did through other sales channels, and (3) Amazon has continued to effectively enforce its most-favored-nation policy through a “fair pricing policy” that requires any product sold on Amazon to “have a price that is equal to or lower than the price of the same item being sold by the seller on other sites or virtual marketplaces.” According to plaintiffs, these policies have the effect of causing third-party sellers to charge supracompetitive prices on other e-commerce platforms.
Plaintiffs bring per se and non-per se Sherman Act Section 1 claims, Sherman Act Section 2 monopolization, attempted-monopolization, and conspiracy-to-monopolize claims, and a per se claim under California’s Cartwright Act. They seek to represent a purported class of persons who purchased any one of approximately 600 million consumer products that plaintiffs allege had inflated costs on other e-commerce platforms. Amazon moved to dismiss, raising various arguments.
First, the Court rejected Amazon’s argument that plaintiffs lacked antitrust standing as (allegedly) indirect purchasers, concluding instead that they were direct purchasers from the third-party sellers who were alleged to be Amazon’s co-conspirators. Relatedly, the Court rejected Amazon’s claim that the third-party sellers had to be joined. Second, the Court held that plaintiffs had sufficiently alleged that Amazon and the third-party sellers had a specific intent to monopolize because Amazon’s policies were designed to maintain market power; so, the conspiracy-to-monopolize claim could proceed. Third, the Court rejected Amazon’s argument that plaintiffs could not establish Article III standing based on absent-class-member purchasers, reasoning that this was, in actuality, an issue for class certification. Fourth, the Court held that plaintiffs had sufficiently alleged that Amazon had market power and that its policies had caused anticompetitive effects to sustain Section 1 and Section 2 claims.
Amazon did find some success, though, in convincing the Court that plaintiffs had not sufficiently alleged per se violations of either Sherman Act Section 1 or California’s Cartwright Act.
As the case proceeds, it will be interesting to see if the ultimate decision has a broader impact on companies’ abilities to enforce most-favored-nation clauses and conduct by internet platforms more generally.