March 27, 2023

Volume XIII, Number 86


March 27, 2023

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March 24, 2023

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Amazon’s Most Favored Nations Policies Scrutinized Under Sherman Act

Antitrust claims in a class action case filed against Amazon in U.S. Federal District Court will largely proceed, after the Court allowed most of the consumers’ pricing claims to survive a motion for summary judgment.  The Court dismissed a Sherman Act claim, but allowed most other claims to proceed.  Of particular note, Amazon’s “most favored nation” (MFN) policy will continue to be under scrutiny, despite the fact that courts typically do not find MFNs to be anticompetitive.  It is widely recognized that MFNs, in fact, often serve procompetitive purposes.

Amazon sells directly to consumers, but also allows third-party merchants to sell products through Amazon.  Many of those merchants also sell the same products on other platforms.  Amazon commonly negotiates MFN provisions in its agreements with its larger third-party sellers.  The MFN protections are meant to ensure that Amazon’s sellers do not undercut Amazon’s own prices when they are selling elsewhere.

The proposed class alleges that Amazon’s MFN policy, and later its “fair pricing policy” – which the court deems to have the same intents and effects as the MFN policy– bar or strongly discourage third-party merchants that sell on the platform from offering better terms or lower prices elsewhere, including their own website.  As the court summarized, plaintiffs in this case asserted that “Amazon charges higher fees for third-party merchants than competitor marketplaces and that these inflated fees are passed on to customers like Plaintiffs through higher prices.”  The claim is based on the assumption that these merchants would otherwise be able to sell their products for less in competitor marketplaces.  The suit contends that the way Amazon runs its platform blocks competition from other platforms that could offer lower merchant fees, savings that could then be passed to consumers.

As we have discussed – in the context of a separate but similar case against Amazon in Washington District Court – the antitrust implications of MFN protections do not align neatly with claims under price gouging laws.  Price gouging laws restrict price increases, creating a price ceiling for sellers.  MFNs tend to create a floor, limiting downward pressure on prices since sellers are bound to not offer goods at lower prices.  The pairing of these two theories is relatively novel, and in states (like Washington) with relatively broad unfair pricing laws, MFN provisions may be subject to greater scrutiny.

While the order acknowledged that, “no Court has ever found a policy like these to violate the Sherman Act,” that alone did not “render these claims implausible” at the motion to dismiss stage.  The suit will proceed in federal district court under federal antitrust law.

© 2023 Proskauer Rose LLP. National Law Review, Volume XIII, Number 30

About this Author

Christopher Ondeck Antitrust Litigator chair of  Proskauer Rose nationwide Antitrust Group

Chris Ondeck is a partner in the Litigation Department and vice-chair of the Antitrust Group. He focuses his practice on representing clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, defense, medical devices, metals,...

John Ingrassia, Antitrust Attorney, Telecommunications, Proskauer Law firm
Special Counsel

John Ingrassia is a special counsel and advises clients on a wide range of antitrust matters in various industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services, health care, and others. His practice includes a significant focus on the analysis of Hart-Scott-Rodino pre-merger notification requirements, the coordination and submission of Hart-Scott-Rodino filings, and the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures. John has extensive experience with the legal, practical,...

Kelly Landers Hawthorne, Proskauer Law Firm, New York, Litigation Attorney

Kelly Landers Hawthorne is an attorney in the Litigation Department.


  • Columbia Law School, J.D., 2017

  • George Mason University, M.Ed., 2013

  • University of Richmond, B.A., 2011