Amazon Investors Amazon Execs Hid Antitrust Troubles – Antitrust, EU Competition

Shareholders say Bezos and Execs Caused Them
“Massive” Losses

Two Amazon Inc. investors have filed a shareholder derivative
lawsuit against Jeff Bezos and other senior company leaders,
alleging they exposed the company to a “massive financial
hit” through antitrust violations and unnecessarily rapid
expansion that had to be scaled back.

The lawsuit targets 20 members of Amazon’s board and
management, which includes past and present Directors and Officers.
It accuses them of lying about the company’s practices in two
major areas: its private-label business selling products alongside
third-party merchants, and the ultra-fast delivery that’s a key
part of the company’s identity.

While Bezos and the others were trumpeting the success of
Amazon’s private-label brands, the suit alleges, they were
secretly exploiting their monopoly power over third-party sellers
on Amazon’s Marketplace to engage in anticompetitive data
practices toward these sellers, using their non-public data to
compete with them and giving their own in-house brands preference
over the third-party sellers. While publicly Amazon characterizes
its sellers as “partners,” the plaintiffs say that behind
closed doors company executives refer to them as “internal
competitors.”

Numerous cases have emerged of Amazon poaching the products of
small businesses and driving them out of business, exploiting
third-party merchants’ non-public data for their own gain, the
complaint states.

The shareholders recounted information shared during
congressional hearings. During an investigation into the state of
competition online, led by the House Subcommittee on Antitrust,
Commercial and Administrative Law, Chair David N. Cicilline’s
(D-RI) told this story: “[A former third-party merchant]
discovered and started selling a unique item that had never been a
top seller for the brand. They were making about $60,000 a year on
just this one item. One day, they woke up and found that Amazon had
started listing the exact same product, causing their sales to go
to zero overnight. Amazon had undercut their price, setting it
below what the manufacturer would generally allow it to be sold so
that, even if they wanted to, they couldn’t match the
price.”

These anticompetitive practices together with Amazon’s
market dominance have exposed the retail tech titan to an
increasing amount of scrutiny by regulators, the shareholders note.
While engaging in these alleged anticompetitive practices, Bezos
and others were rigging Amazon’s search algorithms to favor its
own products — a tactic that’s also the focus of
investigations and litigation — while pushing to expand
fulfillment and delivery services at an unnecessarily fast pace
that stretched company resources, amounting to a waste of corporate
assets, the investors allege.

As news was emerging of Amazon’s anticompetitive business
practices and fulfillment problems, its stock prices dropped by as
much as 3.66% in July 2020, according to the complaint.

The company is fighting enforcement cases and proposed class
actions targeting nearly every aspect of its business, from
“most favored nation” pricing pacts — which have
allegedly driven up the online price of virtually everything
— to policies that allegedly penalize merchants for avoiding
its shipping and logistics services, the shareholders say.

In addition to damages, the plaintiff investors want:

• Amazon leadership to reform its corporate governance and
  internal procedures to comply with applicable laws and to protect
  the company and its shareholders from a repeat of the damaging
  events outlined in the lawsuit.




• Restitution from each defendant.




• All defendants to forfeit any and all profits, benefits, and
  other compensation they may have received as a result of their
  alleged misconduct.

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