WSJ: House Judiciary Bigwigs Ask Justice Department to Probe Amazon for Possible Criminal Obstruction of Congress

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

The Wall Street Journal reports this morning a bipartisan group of key House Judiciary Committee members has sent a 24-page letter to attorney general Merrick Garland, asking the Department of Justice (DoJ) to probe Amazon and some of its executives for possible criminal obstruction of Congress.

The letter was signed by three Democrats, judiciary committee chairman Jerrold Nadler, antitrust subcommittee chairman David N. Cicilline, and antitrust subcommittee vice chairman Pramila Jayapal. Two Republicans, ranking member of the antitrust subcommittee Ken Buck and member on the antitrust subcommittee Matt Gaetz, also signed on. Reigning in big Tech is a goal upon which at least some Congresscritters on both sides of the aisle can agree.

As far as I can see, the wSJ broke the story. Other media and commentators have begun to weigh in – including the Washington Post – owned by Jeff Bezos, founder of Amazon, and a player in the allegations –  and CNBC.

The WSJ also  conducted “credible investigative reporting” that underpins the letter’s claim that Amazon lied to Congress in in sworn testimony by a senior executive. According to the letter:

Last Congress, the U.S. House of Representatives’ Committee on the Judiciary (Committee) conducted an extensive investigation into competition in digital markets. During that investigation, and in follow-up inquiries, Amazon engaged in a pattern and practice of misleading conduct that suggests it was “acting with an improper purpose” “to influence, obstruct, or impede” the Committee’s investigation and inquiries.

In its first appearance before the Committee during the investigation, Amazon lied through a senior executive’s sworn testimony that Amazon did not use any of the troves of data it had collected on its third-party sellers to compete with them. But credible investigative reporting showed otherwise. For instance, The Wall Street Journal reported that, although Amazon “has long asserted, including to Congress, that when it makes and sells its own products, it doesn’t use information it collects from the site’s individual third-party sellers,” “interviews with more than 20 former employees of Amazon’s private-label business and documents reviewed by The Wall Street Journal reveal that employees did just that.”The Committee’s investigation uncovered similar evidence from former Amazon employees, as well as current and former sellers. [Jerri-Lynn here: citations omitted].

And this is just the first page! In the interests of keeping this post short, I’m not going to parse all or even many of its claims. Readers can read the letter themselves by clicking on the link above. Yet having read the details marshalled in the letter, I think Garland has no choice but to initiate a wider probe into these allegations.

Neither Amazon nor the DoJ could be reached for comment on the WSJ’s story – although the Journal notes:

In the past, a spokesman has denied that the company or its executives misled the committee and has said that internal policy prohibits using individual seller data to develop Amazon products. Amazon investigates any allegations that the policy might have been violated, the spokesman has said.

Recall that the House judiciary committee conducted a 16-month antitrust investigation into Amazon and three other big Tech companies, Apple, Google parent Alphabet, and Facebook (aka Meta Platforms) that resulted in an October 2020 report. Amazon is the only one of the four companies that the committee accuses of criminal obstruction.

Maybe Jeff Bezos Shouldn’t Plan on Booking Any More Rocket Trips Anytime Soon

At issue are practices Amazon employs to give its products a competitive advantage. Since the WSJ broke the story this morning  as to the existence of the latter, permit me to quote extensively from its account, according to which:

Amazon executives repeatedly told members of the House committee in testimony and written responses that it doesn’t use the data of individual third-party sellers to inform the vast lines of its own brands, and doesn’t privilege its own products in the search results on its platform.

A Journal investigation published in April 2020, citing internal documents and interviews with former Amazon staffers, found the company’s employees routinely used such seller data to develop products for its own brands. Subsequent reporting from Reuters, Politico and the Markup showed employees using this data and Amazon preferencing its own products in search results. Lawmakers have said they also gained similar information through their own interviews with people including former Amazon employees.

When he appeared before the House Antitrust Committee in July 2020, in what was his first time testifying before Congress, Amazon founder and executive chairman Jeff Bezos said he couldn’t guarantee that its policy was always followed. He agreed to share with members of the panel the results of an internal investigation Amazon was conducting following the Journal article.

The committee asked Amazon to pony up evidence to support Bezos’s claims – to no avail:

Committee members asked Amazon to produce evidence to support its denials, including a report from the investigation Mr. Bezos had referenced. In meetings with congressional staff and written testimony, Amazon or its lawyers refused to produce the investigation report and other documents, according to the letter and people familiar with the matter. Instead, the letter says, Amazon representatives provided broad denials without supporting evidence.

In October, committee members sent a letter to Amazon Chief Executive Andy Jassy urging the company to provide “exculpatory evidence” surrounding its private-label business practices. Lawyers representing Amazon met with legal counsel for the committee following the letter but didn’t produce the requested evidence, saying the investigation Amazon had conducted was privileged information between attorney and client, according to people familiar with the matter.

Amazon “has refused to turn over business documents or communications that would either corroborate its claims or correct the record,” the letter says. “And it appears to have done so to conceal the truth about its use of third-party sellers’ data to advantage its private-label business and its preferencing of private-label products in search results—subjects of the Committee’s investigation.” [Jerri-Lynn here: my emphasis.]

Over to you, DOJ

The key question now is whether Merrick Garland’s DoJ wants to shed its reputation as the Department of Jokes and become a feared enforcement player again. It’s well past time to inter the Holder memo (and the Yates codicil). Note that the department’s descent into insignificance didn’t begin on Trump’s watch – as I wrote in 2016 in The Obamamometer’s Toxic Legacy: The Rule of Lawlessness.

The first necessary step in that direction:

The only way that companies will cease doing bad things is when senior executives face criminal charges for the corporate behavior. https://t.co/S9ovWa2xRQ

— Samuel Scott (@samueljscott) March 9, 2022

In a March 6 post, I wrote about a speech Garland delivered last week, outlining the DoJ’s corporate crime prosecution priorities, AG Merrick Garland Outlines Corporate Crime Prosecution Priorities. My reading of the speech is that, generally speaking, it’s not left C-suiters cowering in their closets.

Yet perhaps some should – at least those who’ve possibly committed antitrust violations, for one area in which the DoJ has been somewhat more aggressive is antitrust enforcement. Per my March 6 post:

For in one area – the realm of antitrust enforcement –  DoJ prosecutors have been significantly more active during the last year:

The Department’s Antitrust Division has also been busy investigating and prosecuting price-fixing and other criminal violations of the antitrust laws. It ended the last fiscal year having brought 25 criminal cases against 29 individual and 14 corporate defendants, and with 146 open grand jury investigations — the most in 30 years.

The Antitrust Division is now trying or preparing to try 18 indicted cases against 10 companies and 42 individuals, including 8 current or former CEOs or company presidents.

Monopoly guru Matt Stoller highlights the following point in his latest post: Biden antitrust policy seems to be ramping up, with criminal charges to be placed on the table (see Antitrust Cops Put Handcuffs for CEOs on the Table):

Under the leadership of new Antitrust chief Jonathan Kanter, the Department of Justice is beginning to get much more aggressive. Here’s what Richard Powers, the head of antitrust criminal enforcement, just told the American Bar Association’s conference on white collar crime.

Wow.

DOJ’s Richard Powers tells @ABAesq conference in SF that the division is prepared to bring criminal charges in monopolization cases.

That’s quite a big deal when you think of the sort of companies facing civil cases under Section 2 – Big Tech in particular.

— Michael Acton (@MActon93) March 2, 2022

Taking on C-suite transgressions would demonstrate that the DoJ is serious about undertaking more aggressive enforcement. The last time the DoJ tried and convicted C-suiters was during the George W. Bush administration. Let me outline some worthy goals upon which I think everyone can agree:

Fraud, theft, corruption, bribery, environmental crime, market manipulation, and anticompetitive agreements threaten the free and fair markets upon which our economy is based. They decimate the assets of individuals, organizations, and governments alike. And they increase costs for every American.

Corporate crime weakens our economic institutions by undermining public trust in the fairness of those institutions.

Failing to aggressively prosecute such crimes weakens our democratic institutions by undermining public trust in the rule of law.

The essence of the rule of law is that like cases are treated alike; that there is not one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.

To fail to aggressively prosecute corporate crime leads citizens to doubt that their government adheres to this principle. The Justice Department does not intend to fail.

Recognize those words, Merrick? They come from the speech you delivered last week. If your DoJ is not to repeat the colossal failure of the DoJ under the last Democratic President, the Garland DoJ must take some C-suite scalps. That means confronting the likes of Amazon.

At minimum, the letter cannot be ignored, its claims swept under the carpet.

Pass the popcorn!