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Amazon seeks recusal of FTC Chair Lina Khan in antitrust probes of the company

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Key Points
  • Amazon on Wednesday filed a motion seeking to recuse FTC Chairwoman Lina Khan from antitrust investigations into the company.
  • Earlier this month, Khan was sworn in as chair of the Federal Trade Commission.
  • Khan made a splash in an antitrust circles with her 2017 Yale Law Journal article, "Amazon's Antitrust Paradox."
Lina Khan, nominee for Commissioner of the Federal Trade Commission (FTC), speaks during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.
Saul Loeb | Pool | Reuters

Amazon is pressing for the recusal of FTC Chairwoman Lina Khan from ongoing antitrust probes of the e-commerce giant, citing her past criticisms of the company's power.

In a 25-page motion filed Wednesday with the FTC, Amazon argued that Khan has made public comments about Amazon and its conduct, including that the company is "guilty of antitrust violations and should be broken up," suggesting she lacks impartiality in antitrust investigations into Amazon.

Amazon spokesperson Jack Evans told CNBC in a statement that Khan has made her views clear through previous work with anti-monopoly group Open Markets Institute, law journal articles and her involvement in the House Judiciary subcommittee on antitrust's sweeping probe into big tech companies.

"Amazon should be scrutinized along with all large organizations. However, even large companies have the right to an impartial investigation," Evans said. "Chair Khan's body of work and public statements demonstrate that she has prejudged the outcome of matters the FTC may examine during her term and, under established law, preclude her from participating in such matters."

An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.

The move comes as regulators in the U.S. and abroad are probing multiple areas of Amazon's business. Europe's top antitrust watchdog brought charges against Amazon last fall and launched another probe into its core retail business. Congress and the FTC are investigating Amazon's treatment of third-party sellers.

Additionally, the FTC is reviewing Amazon's proposed acquisition of movie studio MGM, The Wall Street Journal reported this month. On Wednesday, Democratic Sen. Elizabeth Warren, D-Mass., wrote a letter to the FTC urging it to carry out a "broad and meticulous review" of the MGM deal, arguing it could have anticompetitive effects in the streaming industry and potentially harm small businesses and workers.

Earlier this month, Khan was sworn in as chair of the FTC. The surprise move came just hours after she was confirmed by the Senate to serve as a commissioner.

During her confirmation hearing before the Senate, Khan told Sen. Mike Lee, R-Utah, she has no financial conflicts that would make her subject to recusal under ethics laws. She said she would follow the evidence where it leads.

Khan made her first big splash in antitrust circles with her 2017 Yale Law Journal article, "Amazon's Antitrust Paradox." The article, which she wrote while still a law student, argued that the popular antitrust framework focused on consumer welfare, was inadequate to assess digital giants like Amazon.

The consumer welfare standard often looks at whether prices go up or down for consumers, but Khan advocated for a more expansive view of antitrust enforcement that could take into account Amazon's role as a platform on which its own rivals rely. She said it was also necessary to understand why a high-growth platform might engage in predatory pricing.

It's not uncommon for companies or advocate groups to challenge commissioners' involvement in certain cases based on their perceived biases.

In the late 1970s, then-FTC Chairman Michael Pertschuk was ordered by a federal court to remove himself from a rule-making inquiry into TV advertising aimed at kids because of his past criticism of such ad practices. But an appeals court later overturned that ruling.

Still, Pertschuk ultimately chose to withdraw from the matter because he said it was becoming a distraction from the inquiry itself.

Amazon pointed in the letter to a prior case where an FTC chair made a statement indicating his judgement on an ongoing matter, which was deemed improper. In Cinderella Career & Finishing School v. FTC, the court ruled that the refusal of the chair to recuse himself was a denial of due process.

Amazon also noted that the court condemned the chair for his involvement in an earlier case where he had investigated the same facts while working on Capitol Hill.

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