Will a Young Lawyer Take Down Amazon?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Oct 1, 2018

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AmazonAmazon recently became the second company to hit $1 trillion in value, following Apple.

As the New York Times notes,

Amazon captures 49 cents of every e-commerce dollar in the United States. It employs more than 550,000 people and generates $178 billion in annual revenue. It sells everything from computing space to peanut butter to appointments with plumbers.

There’s nothing illegal about being rich and successful, either for companies or individuals.

As the Columbia Law Review wrote back in 1909,

At common law, neither a large corporation nor a large partnership is an illegal combination. In no proper legal sense is a large, dominating corporation a combination at all, but whether or not it is a combination, it is certainly not an illegal one. For, as we shall presently show, the common law does not condemn size as such, or set any limits to the amount of business or property of an individual or corporation, and neither a partnership nor a corporation was ever thought of as involving a restraint of trade.

Antitrust

Antitrust law is the body of state and federal laws that regulate businesses and aim to promote fair competition and thus benefit consumers.

The three main US antitrust laws are:

  • The Sherman Act of 1890
  • The Clayton Act of 1914
  • The Federal Trade Commission Act of 1914

The Sherman Act prohibits:

  • anticompetitive agreements
  • unilateral conduct by a company that monopolizes or attempts to monopolize a market

The Clayton Act prohibits things like price discrimination, exclusive dealing arrangements, and mergers and acquisitions that tend to lessen competition.

The Federal Trade Commission Act prohibits unfair competition, including unfair or deceptive acts.

Consumer Prices

As the Times notes, since the 1970s antitrust law has focused on “consumer welfare, which is to say price.”

Amazon is noted for its bargains, which benefit consumers, so that would seem to make it immune from antitrust challenges.

However, as the Times reports, young lawyer Lina Khan is challenging that view.

In 2017, as a law student, she published an article called  “Amazon’s Antitrust Paradox” in the Yale Law Journal. 

As the Times notes,

Over 93 heavily footnoted pages, she presented the case that the company should not get a pass on anticompetitive behavior just because it makes customers happy. Once-robust monopoly laws have been marginalized, Ms. Khan wrote, and consequently Amazon is amassing structural power that lets it exert increasing control over many parts of the economy.

Khan is now an adviser at the Federal Trade Commission (FTC), which is holding a series of hearings this fall on “whether a changing economy requires changing enforcement attitudes” for antitrust law.

Antitrust Hipsterism

Khan’s position is controversial, and has even been called “Antitrust Hipsterism.”

For example, as the Times notes,

Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School, wrote that if companies like Amazon are targeted simply because their low prices hurt competitors, we might “quickly drive the economy back into the Stone Age, imposing hysterical costs on everyone.”

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