Attorney General Jennifer Davenport today announced an antitrust lawsuit against Amazon, alleging that the e-logistics giant unlawfully maintains its dominant power over DSP drivers in the labor market by preventing unionization, restricting the companies in its delivery network from hiring one another’s drivers, and otherwise limiting competition for their labor. The complaint alleges that Amazon’s conduct causes thousands of New Jersey residents to earn lower wages and to endure harsher working conditions than they should.
The complaint, filed in the United States District Court for the District of New Jersey, seeks to hold Amazon and its subsidiaries, Amazon.com Services, LLC and Amazon Logistics, Inc., accountable for abusing their dominant buying power, known as monopsony power, in the market for delivery driver services. It is the first time any state has brought a monopsony conduct complaint.
“Today, my office is acting to stand up for thousands of New Jersey delivery drivers who are being exploited every day by one of the world’s biggest, richest corporations,” said Attorney General Davenport. “As our complaint alleges, Amazon built a company worth trillions while subjecting drivers in its delivery network to artificially low pay and punishing working conditions thanks to its overwhelming power in the labor market. I will continue to fight monopolies and the devasting effects they have on our residents.”
In 2018, Amazon created the Delivery Service Partner program, known as the DSP program. Amazon calls DSPs independent businesses, but the complaint alleges that these businesses are anything but independent. Rather, Amazon keeps control of the levers that matter—setting demanding operational requirements, monitoring driver performance, controlling route allocations, and restricting DSPs from hiring one another’s drivers—with exploitative consequences for the drivers themselves. Amazon is able to maintain this anticompetitive environment because it is the dominant purchaser of labor for DSP delivery services.
The complaint further alleges that Amazon closely monitors DSP drivers through artificial intelligence, in-vehicle cameras, and other technology, and that it has responded to suspected union organizing with intimidation and the retaliatory reallocation of routes. In one incident, Amazon deployed drones around a facility where drivers were organizing; in another, Amazon allegedly ended a DSP’s work at a facility in retaliation for organizing activity, causing the operation to close and numerous drivers to lose their jobs. And these anticompetitive tactics have predictable human costs: beyond simply making less and suffering more lost-time injuries, DSP drivers have reported, for example, that they are forced to urinate in water bottles inside their vehicles to meet Amazon’s unforgiving delivery metrics.
The complaint also alleges that Amazon controls the DSPs’ hiring process—further evidence that these are not really independent competitors. For instance, some workers who supported union organizing at an Amazon delivery station were later rejected or terminated by other DSPs in Amazon’s delivery network. And Amazon has sought to prevent DSPs from hiring each other’s workers—a classic form of anticompetitive behavior known as “no-poach” agreements.
Although Amazon calls these DSP companies “entrepreneurs,” it supplies not only the packages to be delivered but also the exact routes to take, the branded uniforms to wear, the software to use, and the company-branded delivery vans to drive. The complaint alleges that DSPs are economically dependent on Amazon and lack meaningful operational independence, leaving them unable to compete for drivers by offering higher pay or better conditions, which is what allows Amazon to hold driver wages down.
All of this anticompetitive conduct, the lawsuit alleges, qualifies as unlawful monopsony power and violates both Section 1 and Section 2 of the federal Sherman Antitrust Act, as well as the New Jersey Antitrust Act. The complaint seeks treble damages for the compensation DSP drivers would have earned in the absence of Amazon’s alleged anticompetitive conduct and permanent injunctive relief to stop the alleged conduct.
This is not the first lawsuit the Office of the Attorney General has filed against Amazon for its misconduct. In one lawsuit, joined by more than a dozen other state attorneys general and the Federal Trade Commission, the Office sued the ecommerce giant for stifling competition on price, product selection, quality, and for preventing rivals from attracting a critical mass of shoppers and sellers, including through use of a sophisticated price-manipulation algorithm. In another lawsuit, the Division on Civil Rights alleged systematic civil rights violations in the company’s treatment of pregnant workers and workers with disabilities. In a third lawsuit, the Attorney General and the New Jersey Department of Labor and Workforce Development sued Amazon and its Amazon Logistics delivery network for misclassifying drivers in Amazon’s Flex program as independent contractors and unlawfully depriving them of rightful wages, benefits, and a host of other legal rights and protections afforded to employees. Each of those cases is ongoing; the trial court denied Amazon’s motion to dismiss in the civil rights case just this past Friday, July 31.
The Attorney General is represented in this matter by Antitrust Section Chief David Reichenberg, Deputy Attorney General Yale Leber, and Deputy Attorney General Samuel Kontos-Bleifer.
