Khan Seeks to End Amazon ‘Illegal Conduct,’ Quiet on Breakup

Matt Day and Leah Nylen
·3-min read

(Bloomberg) -- Federal Trade Commission Chair Lina Khan stopped short of explicitly calling for a breakup of Amazon.com Inc., but said that her agency would ask a judge to halt the company’s “illegal conduct” if its antitrust suit succeeds.

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In her first public comments after the FTC filed a lawsuit accusing Amazon of monopolizing online marketplace services, Khan said businesses that want to sell their goods online were effectively forced to pay Amazon’s rates, including for advertising and logistics services.

“At the very least, any relief would require that the company halt those tactics,” Khan said at Bloomberg’s Washington office on Tuesday. “Effective relief also needs to be restoring competition to this market, which we’ll be asking the judge to do as well.”

The complaint, filed by the FTC and 17 states on Tuesday, doesn’t ask for specific remedies, but mentions “structural relief,” which in antitrust lingo often means divesting an asset or breaking up a business. Amazon says it will defend itself against the lawsuit, and that what the FTC seeks will lead to higher prices and hurt businesses that rely on Amazon to get their goods to shoppers.

“This case is about the competition that has been lost because of Amazon’s monopolization and unlawful tactics,” Khan said.

Read more: How Amazon FTC Case Tests Khan’s Antitrust Theories: QuickTake

While acknowledging that antitrust cases tend to take a long time to litigate, Khan said the FTC would seek to move the case “expeditiously” and that the agency sees “an enormous amount of urgency” because of the stakes in the case.

“There’s cumulative harm in ways that just altering the tactics may not be sufficient to fully restore competition, especially in a world where some of these tactics have been going on for a while,” she added.

The Amazon case is a career-defining moment for Khan, the youngest ever FTC chair whose blockbuster 2017 law review article about the e-commerce giant catapulted her to celebrity status in the world of antitrust. Before joining the FTC, Khan worked on a congressional subcommittee investigating the four major US tech giants, which culminated in a 2020 report finding evidence of market consolidation. The lawsuit is part of an effort by antitrust enforcers to crack down on the biggest tech platforms, coming after monopolization suits filed against Alphabet Inc.’s Google and Meta Platforms Inc.

As FTC chair, Khan has sought to more aggressively police mergers, particularly those by the biggest technology companies, as well as anticompetitive conduct by the largest US companies. But the agency’s results have been mixed as it suffered two court defeats so far this year.

Private Equity ‘Roll-Ups’

Khan highlighted a case the FTC filed last week that alleged a private equity firm engaged in a scheme to monopolize the market for anesthesiologists in Texas using the “roll-up” strategy. The agency sued US Anesthesia Partners Inc. and Welsh Carson Anderson & Stowe LP in Texas federal court for systematically buying up more than a dozen anesthesiology practices in the state and then raising prices. Both USAP and Welsh Carson deny that they violated the law and said price increases were in line with inflation.

“There’s been less attention paid to ‘stealth consolidation’ through serial acquisitions,” Khan said.

The FTC intends to continue scrutinizing the practice, she said, though declined to name any particular industries where the agency is looking.

“We want to make sure we’re scrutinizing where there may be the most harm,” she said.

(Updates with additional comments in sixth paragraph.)

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