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Amazon Drops Lowest-Pricing Rule for Third-Party Sellers | E-Commerce Times

Arguments Against the MFN Clause
MFNs used by online platforms can harm competition by keeping prices high and discouraging the emergence of new platform rivals through both exclusionary and collusive mechanisms, wrote Jonathan Baker and Fiona Scott Morton in a Yale Law Journal article published last year.

Government enforcers in the U.S. and private plaintiffs potentially could target anticompetitive platform MFNs under the Sherman Act, they pointed out, and the litigation challenges presented by such cases.

Amazon’s leading position in the U.S. e-commerce market may give it “the degree of market power at which its price parity provisions could raise serious competition concerns,” Blumenthal noted in his letter to the FTC.

Amazon accounted for 40 percent of last year’s US$517 billion U.S. online retail market, according to Internet Retailer. Overall, e-commerce sales represented nearly 52 percent of all retail sales growth in the U.S. last year, and accounted for more than 14 percent of total retail sales.

“Third party vendors were locked out by Amazon,” observed Ray Wang, principal analyst at Constellation Research.

Amazon “used its pricing power, loyalty programs and reach to create an unfair advantage,” he told the E-Commerce Times.

No Relief for the Competition
The deletion of the MFN clause is not likely to be of much help to etailers.

“Retailers such as Amazon and Walmart can demand the pricing and other concessions they want from suppliers, and their scale gives them a lot of negotiating power,” Nucleus’ Wettemann pointed out. “This isn’t going to go away because the most obvious anticompetitive restriction is lifted.”

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Amazon Drops Lowest-Pricing Rule for Third-Party Sellers | E-Commerce | E-Commerce Times.

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