July 6, 2021

NAW Calls Bills a “Major Step” Toward Curbing Amazon

Summarized from Jade West, National Association of Wholesaler-Distributors

Last week, the House Judiciary Committee passed six bipartisan bills targeting the abusive and anticompetitive practices of the four largest tech monopolies in the country. In particular, the American Innovation and Choice Online Act and the Ending Platform Monopolies Act, sponsored by Reps. David Cicilline (D-RI) and Pramila Jayapal (D-WA), would prohibit Amazon from abusing its power in ways that harm competition and third-party sellers. Together, these bills will restore competition on Amazon Business’ (B2B) marketplace by preventing them from using their market power to pick winners and losers, favor their own products or otherwise distort the marketplace through abusive conduct.

To read NAW’s press release from last week, click here.

The road ahead for these bills remains long and uncertain. House Speaker Nancy Pelosi (D-CA) has given a general thumbs-up to the antitrust push and supports bringing these bills to the floor. However, there are several Silicon Valley Democrats who have pushed back on these bills claiming that they go too far and will ultimately be bad for their constituents. Some conservatives are also upset that these bills do not include language to prevent these tech companies from censoring conservative speech. House Republicans, led by Minority Leader Kevin McCarthy (R-CA) and Rep. Jim Jordan (R-OH), rolled out an alternative this week. Their proposal includes overhauling Section 230 of the Communications Decency Act and mandates that the companies publicly list content moderation decisions. Politics aside, last week was a major step in NAW’s long journey to curb Amazon’s anti-competitive and abusive actions. 

In 2019, NAW engaged on a mission to urge the Federal Trade Commission (FTC) and Members of Congress to end Amazon Business’ monopolistic mistreatment of third-party sellers. Amazon Business (the company’s B2B unit) has taken the B2B marketplace, in which NAW members operate, by force. The FTC has opened an investigation into Amazon’s conduct in several areas, including that of the Business to Consumer (B2C) market. In early 2020, we held a meeting with the FTC to discuss Amazon Business’ mistreatment of its third-party sellers in the B2B marketplace. We made the case that Amazon’s exploitative conduct in B2B commerce mirrors the playbook it has executed in the B2C marketplace. Unchecked, Amazon’s dominance threatens to cripple the highly competitive B2B system which exists in our country.

Around the same time, the House Judiciary Antitrust Subcommittee was underway with its investigation into Amazon’s abusive treatment of third-party sellers. In several meetings with subcommittee Members and staff, we demonstrated how Amazon Business is anything but competitive. Like its B2C business, Amazon plays “both sides” of B2B by selling its own products in direct competition against third-party sellers who sell on Amazon Business. In late 2020, the subcommittee released its blockbuster report detailing allegations of anti-competitive abuses by tech’s most powerful companies, including Amazon, and offered a menu of policy remedies on how to clamp down on their anti-competitive and abusive practices. Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations, Subcommittee on Antitrust, Commercial and Administrative Law, Committee on the Judiciary, House of Representatives, pages 237-339 (October 2020)

https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf

On a similar but separate mission, NAW continues our fight to stop Amazon from securing a government-granted monopoly. Section 846 of the FY’18 National Defense Authorization Act (Public Law 115-91) established a framework for determining whether commercial e-commerce portals would be appropriate for government agencies to use to make non-contract purchases of commercial off-the-shelf (COTS) products. The law charged the General Services Administration (GSA) with establishing and managing the testing of three models. Although the General Services Administration (GSA) identified three credible e-commerce purchasing channels, its June 2020 award tests only one model, the Amazon platform. All other e-commerce models are excluded. GSA’s award to three vendors, the most prominent being Amazon Business, ignores the explicit Congressional direction to test several e-commerce platforms. GSA’s selection of Amazon as the gatekeeper reduces competition for the federal customer and forecloses access to the federal market.

Since its award, GSA has released no meaningful information addressing the progress and challenges of its pilot marketplace. Amazon’s inability to protect the federal purchaser from counterfeit and illicit products presents a significant risk but does not appear to be addressed by GSA’s requirements beyond that it is a vendor responsibility. Nor is there any indication that the obligations associated with Section 889 of the National Defense Authorization Act for 2019 as to Chinese manufactured telecommunications equipment are being fulfilled.

We are currently working with Rep. Veronica Escobar’s (D-TX) office on legislation that would require the GSA to expand its proof-of-concept testing to include the other two portal models mandated by Congress and prevents Amazon from selling its own products against third-party sellers on its marketplace. We are also requesting that the Government Accountability Office (GAO) conduct an independent study and report on the business practices of dominant online platform operators in the business-to-business digital market.