Notice & Comment

Khan v. Khan, Chapter Two, by Richard J. Pierce, Jr.

On September 29, 2023, shortly after the FTC filed its complaint alleging that Amazon is illegally monopolizing the market for online sales of goods, I wrote a blog in Notice and Comment titled FTC v. Amazon Should Be Khan v. Khan. I began by noting that FTC Chair Khan had obtained her initial notoriety by publishing a student Note in Yale Law Journal in which she argued that Amazon was illegally monopolizing the market for online sales of goods.

I then described the inherently inconsistent theories on which her Note and the FTC’s complaint are based. In her Note, she argues that Amazon is monopolizing the market by engaging in predatory pricing, i.e., by selling goods at a price so low that it will drive competitors out of business. She recognizes that the Supreme Court has repeatedly rejected that theory of monopolization. She criticizes the Court’s decisions.

In the FTC’s complaint, Khan argues that Amazon is monopolizing the market for online sales of goods by charging excessive prices for the goods. That theory of monopolization is consistent with the Supreme Court’s opinions, but it is inconsistent with the facts that Khan recites in her Note. I suggested that Khan had changed the theory on which her claim of monopolization is based solely because her new theory was consistent with the law while her old theory was inconsistent with the law. I also suggested that she would encounter problems in her effort to support her new theory with evidence because the facts are consistent with her old theory.

Khan’s task has now gone from formidable to impossible. The American Booksellers Association (ABA) has filed a motion to intervene in the FTC’s case against Amazon. The ABA wants to join the FTC in arguing that Amazon is illegally monopolizing the online market for books.

The ABA and its allies have made that argument in a series of cases for over a decade.[1] The ABA is more opponent than ally of the FTC in this case, however. The ABA has submitted voluminous evidence in prior cases that Amazon has been selling books at unduly low prices, not at the unduly high prices that the FTC alleges in its complaint. If the ABA is permitted to intervene, the FTC will have the impossible task of rebutting the mountain of evidence that its putative ally submits. FTC is opposing the ABA’s motion to intervene. Even if the FTC is successful in keeping the ABA out of the case, however, the court will have no problem recognizing the inconsistency between the FTC’s new theory of liability and the available evidence in the process of deciding whether to grant the ABA’s motion to intervene.

Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at the George Washington University Law School.

[1] See, e.g., United States v. Apple, 791 F. 3d 290 (2d Cir. 2015).

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