Big Box Retailers Discover the Virtues of Antitrust
The Retail Industry Leaders Association, which represents Walmart, Target, Home Depot, and other national retailers, wrote a letter to the Federal Trade Commission last week demanding that the FTC examine “persistent oligopolies in other parts of the retail ecosystem.”
The letter mostly complains about the lack of antitrust enforcement against Amazon and Google. Unmentioned is the irony that Walmart’s growth into a retail Goliath was made possible by a sharp retreat from antitrust and fair-trade law enforcement that began in the late 1970s. Enforcers looked the other way as Walmart gained monopoly power in market after market while using predatory pricing to drive out competitors, as explained by Open Market’s Claire Kelloway in last week’s Food & Power.
Yet now Walmart and other large retailers have to worry about even larger predators. Walmart’s share of consumer retail spending has remained flat since 2014, while Amazon’s share has nearly tripled, according to payments and commerce site PYMNTS.com. Amazon similarly threatens to overtake Walmart within retail product categories like sporting goods or clothing.
So Walmart and other members of the RILA have found religion about anti-monopoly. Here are four specific demands they make of the FTC and federal policymakers:
Address Amazon’s (and Google’s) power over the information consumers see. The RILA writes, “It should thus be quite concerning to the Commission that Amazon and Google control the majority of all Internet product search, and can very easily affect whether and how price and product information actually reaches consumers.” In an email to Open Markets, RILA Vice President Nick Ahrens further explained that “Amazon has demonstrated a willingness to use its product search dominance and marketplace dominance to achieve anticompetitive advantage.” Amazon gathers information not only from its e-commerce business but also from its numerous other businesses including its highly important cloud services and advertising businesses. “To put the matter as simply as possible,” the retailers write, “a firm does not need to have the power to control prices if it has the power to control effective access to price information.”
Put future mergers and behavior by Amazon and Google “under the heaviest possible scrutiny.” Invoking the “ever-increasing tide of revelations” involving platform companies and user privacy, the RILA says that this record should “easily suffice” to make antitrust authorities suspicious of future mergers and practices. In particular, antitrust authorities should be highly suspicious of actions that “increase the amount of potentially sensitive data [dominant platforms] control.”
Check Amazon’s power over its marketplace for third-party sellers. The retailers encouraged the FTC to be “particularly focused” on instances where Amazon abuses its role as an essential marketplace. Small sellers, the RILA warns, “feel that they have no choice but to operate on Amazon, because Amazon represents nearly half of the e-commerce market.” Because of this, retailers risk “giving Amazon information that allows it to capture their business if the data shows it to be profitable or growing.”
Study Amazon’s use of its logistics business to advantage itself as a seller of goods. Pointing out that Amazon also sells delivery services to many third-party sellers, “Amazon gains an advantage when it wishes to launch a store brand,” RILA writes, raising “clear antitrust concerns.” Furthermore, Amazon’s access to information about third-party sellers’ suppliers “through fulfillment data creates even greater anticompetitive risk.”
Even longtime critics of Walmart like Stacy Mitchell, co-director of the Institute for Local Self-Reliance and author of a book on mega-retailers, Big-Box Swindle, say that Walmart and other big retailers have good reason to worry. In many ways, Mitchell says, Amazon’s buyer power and steep-price cutting represent “a continuation of Walmart’s playbook.” But she adds that Amazon’s “godlike view” over online commerce, as well as its power over small businesses and logistics reach “make Amazon something else that is much more threatening to economic liberty and democracy than Walmart.”