Amazon news about a new legal theory that could target the company may have AMZN stock falling on Monday.
This new legal theory claims that some rivals of Amazon (NASDAQ:AMZN) would be able to sue it over predatory prices. The legal theory would target companies that lower prices below profitable levels in an effort to bankrupt competition.
A specific case brought up in connection to this legal theory concerns diapers.com. The company was an acquisition target for Amazon, but the owners refused to sell it. Following this, AMZN dropped its diaper prices to the point that it would likely be taking losses on each sale.
As a result, diapers.com was also having to drop prices to compete, but couldn’t afford to take the losses. Out of fear that AMZN would lower prices even further, the company agreed to be bought by Amazon.
If the new legal theory could target the company for these practices, it would be bad Amazon news. This could see the company facing a large amount of lawsuits from smaller rivals that may allegedly have to deal with these practices, reports The Verge.
Other Amazon news today includes the company expanding its Delivery Service Partner program. This has the company promising to give employees initial funding to quit and start up delivery businesses. That includes $10,000 in startup costs and up to three months of wages.
AMZN stock was down 4% as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.