On Monday, Amazon announced its decision to remove a restriction that was previously criticized as “anti-competitive,” a source told CNBC.
The restriction made it so third-party sellers on Amazon.com couldn’t offer lower prices on any competing websites. Business Insider reported the source gave no further details on the decision.
The move comes after Sen. Richard Blumenthal sent a letter to Federal Trade Commission Chairman Joseph Simmons and Assistant Attorney General Makan Delrahim arguing that the practice would “stifle market competition and artificially inflate prices,” as reported by CNBC. He went on to say Amazon has enforced the policy by threatening to remove any merchants who violated it.
Blumenthal’s concerns are reminiscent of investigations in Germany and Great Britain a few years ago. According to The Verge, regulators looked into Amazon’s practice, and it was abandoned in Europe.
Germany is Amazon’s second-biggest market. Therefore the company probably realized that if its policy was overturned there, it may not stand up to continued scrutiny in the United States.
“Amazon’s wise and welcome decision comes only after aggressive advocacy and attention that compelled Amazon to abandon its abusive contract clause,” Blumenthal said on Monday, according to The Verge. “I remain deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers.”
Recently, the FTC launched a Technology Task Force that’s supposed to look into anti-competitive behavior. When announcing the task force, Simmons said, “As I’ve noted in the past, it makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition.”
Although it’s possible that Amazon still changed its contract because it wanted to avoid scrutiny from the new task force, the FTC should be making transparent actions.
It’s a sentiment shared by Blumenthal who said, according to The Verge, “The DOJ and FTC must begin aggressively investigating Big Tech’s potential antitrust violations and take necessary enforcement actions to deter more harmful behavior.”