The American Booksellers Association has written to the U.S. Department of Justice antitrust division (DOJ) in response to its call for information on how online market providers have acquired their market power and whether these platforms are engaging in “practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”
The 22-page letter follows a July letter that ABA wrote to the Federal Trade Commission Bureau of Competition Technology Task Force, urging it to investigate Amazon’s anticompetitive conduct and rapidly growing dominance in the technology sector.
After the DOJ announced its plans last month to review these “market-leading” online platforms, Assistant Attorney General Makan Delrahim of the Antitrust Division called for information from the public, including industry participants who have direct insight into competition in online platforms, as well as others.
In a comprehensive letter dated August 28, ABA CEO Oren Teicher states that ABA supports DOJ’s decision to review online market providers. “As a trade association of independent booksellers, we do indeed have insight into competition in online platforms due to our members’ experience competing with Amazon — a corporate giant that is now far more than a retailer, and that is unquestioningly a leading platform in the U.S.,” Teicher notes.
Teicher goes on to make the case against Amazon for antitrust violations, providing DOJ with a thorough examination of how industry trends and data indicate that Amazon is well on its way to becoming a tech industry monopoly. “When examining the company’s history and present business model, it is clear that Amazon is able to use its dominance to manipulate market structures, suppress competition, and harm consumers and other stakeholders. In turn, Amazon is able to further expand its market share,” he stresses.
In Teicher’s letter, he notes that an apt comparison to Amazon is A&P, which was broken up for antitrust violations in 1949. The similarities between the two retailers (when A&P was at the height of dominance) is striking, he writes. In the 1920s and ’30s, the Great Atlantic and Pacific Tea Company (A&P) changed the way people shopped. And, like Amazon, A&P ultimately used its size in an abusive manner to spur even further growth and dominance. “The business model of A&P was based on two things: Spreading innovative formats (such as the economy store and then the supermarket), and using threats, bribery, and extortion to destroy competition and control suppliers,” he explains.
The similarity between Amazon and A&P is not lost on Amazon proponents, who insist that because Amazon has low prices, anything it does is fine, Teicher notes.
Teicher continues: “These Amazon apologists vehemently argue that the antitrust action against A&P was a mistake that should not be repeated. However, it’s important to recognize that the overall grocery market experienced very strong growth following the decision against A&P. In 1950, grocery supermarkets accounted for 35 percent of food sales, but over the next two decades, supermarkets flourished — by 1960, supermarkets sold 70 percent of food for home consumption. During the 1950s, the number of stores more than doubled — from 14,000 in 1950 to 33,000 in 1960. It is very hard to believe that such growth would have occurred had A&P continued to abuse its monopoly power.”