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Case Name: Amazon.com
Court: Western District of Washington
Case No: 22-CV-00617, 2:22-CV-907
Ticker: AMZN
Complaint 1. Anticompetitive Practices
On June 3, 2019, the House Judiciary Committee issued a
report titled “Investigation
of Competition in Digital Markets.” The committee alleged that Amazon used
its inside view of third-party sales data of products marketed on Amazon, but not made by
Amazon, to create and promote its own versions of many of these products,
sold under the label “Amazon Basics.” The committee found that Amazon engaged
in a number of anti-competitive practices, including making replica copies of third-party
products, pricing its products below cost, and promoting Amazon Basic versions over competitors.
The committee wrote that, “Amazon’s market power is at its
height in its dealings with third-party sellers. The platform has monopoly
power over many small- and medium-sized businesses that do not have a viable
alternative to Amazon for reaching online consumers.”
Nearly three years after this report, on March 9, 2022, the Committee
referred Amazon to the Department of Justice for potential criminal violations,
namely for “fail[ing] to comply with multiple attempts to clarify misleading
testimony and statements before [the] Committee.”
The next ax fell on April 6, 2022, when the Securities and
Exchange commission announced it had begun investigating Amazon for
anti-competitive practices. “On this news,” plaintiffs
Badgley Mullins Turner wrote in their class action complaint filed May 6, 2022,
“Amazon’s stock price fell $105.98 per share, or 3.2%, to close at $3,175.12
per share on April 6, 2022.”
Finally, on April 28, 2022, Amazon reported its first
quarterly loss in seven years. More on this below.
Plaintiffs allege
that Amazon’s anti-competitive behavior led to a heightened risk of regulatory
inquiries and that its revenues derived in part from these “unsustainable” methods.
Complaint 2: Hubris
In a similar complaint filed by the law firm Tousley Brain
Stephens on June 28, 2022, plaintiffs echo these allegations and add one more: “an overly aggressive expansion of its
warehouse and fulfillment network that would expose it to billions in
unnecessary 'incremental costs' which would ultimately and adversely impact its
financial result.”
2020 year was a boom time for Amazon. It may be hard to
recall, but squint just-so and you may summon up the mood of the world two
years ago: the entire world shut down, we were all afraid to go to stores,
and vast sections of the world turned to online delivery services like Amazon
for shopping.
That summer may have felt like a new normal had arrived and that it would last forever,
and the convenience of online shopping is certainly nice. But the level of
expansion descibed in the complain may have been a bit much:
"At the end of 2019, Amazon’s distribution, warehouse and data
center space covered approximately 192 million square feet. Beginning in 2020,
the Company engaged in a massive expansion spree, expanding its data and
fulfillment centers until they covered approximately 387.1 million square feet
by the end of 2021, doubling its size in two years and resulting in an excess
of space and employees that forced the Company to pivot into “cost efficiency””
mode.
On April 28, 2022, Amazon posted its first quarterly loss
in seven years. The loss reflected, in part, $2 billion in “incremental costs”
arising from the Company’s doubling of its warehouse, fulfillment, and data
center space…
This over-expansion forced the Company to pivot into “cost
efficiency” mode, halting further expansion and even cancelling some planned
expansion projects.
On this news, Amazon’s stock fell 14.05% from $144.59 per
share, to $124.28 per share on close on April 29, 2022."
Chicago Clearing Corporation is tracking both of these class action complaints. In fact, we track every securities class action against every corporation in America. Should this case, or any litigation against any corporation, settle, we will store all of the key information in our database and share it with our clients on our website. Call us today at 312-204-6970 to not only keep up with the Amazon litigations, but with hundreds more filed each and every year.
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Cornerstone Research has released its yearly securities
class action litigation report and found dramatic increases in the number of
settlements and in the average settlement pools. (The link to the full report
is below.)
Cornerstone focused on federal securities class actions, specifically cases al... Read More