Chaos is Not a Pit. It is a Ladder.

By: R. Daniel Johnson

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There is no question that the Coronavirus pandemic has and will continue to drastically alter the business world. Even in this uncertainty, some companies are experiencing more confidence and profits than ever before. Amazon has gained over $570 Billion in market capitalization this year. Its stock has risen 63.3 percent and is now trading for $3,000 a share. Clorox has experienced organic sales growth of over 24 percent. Peloton reported revenue growth of 77 percent. But these success stories are few and far between as CNBC has reported that over 7.5 Million companies are at risk of closing their doors every day. Despite the looming closure that many companies are facing due to the pandemic, some companies have thrived. The massive success of these companies have led many to fear monopolization and antitrust issues.

The impact of the pandemic resulted in the Department of Justice issuing a statement reminding companies that any violation of antitrust laws will not be tolerated. This statement further provided an expedited review process in order to protect companies that were collaborating with the intent “to protect health and safety during the pandemic.” In response to concern of larger companies using the pandemic to exploit smaller companies, the Senate has introduced the Pandemic Anti-Monopoly Act that would effectively place a hold on all “risky mergers and acquisitions.” The pandemic has resulted in a number of companies engaging in conduct that some call questionable.

In March, Amazon was hit with a class action lawsuit for violating antitrust laws by horizontally fixing prices. Amazon had allegedly required all sellers to “have a price that is equal to or lower than the price of the same item being sold by the seller on other sites.” Amazon has also been accused in various news articles of abusing the Amazon Prime feature, as a way to restrict other companies on Amazon. The feature apparently penalizes sellers who refuse to use the Prime feature and opt to do their own delivery. The company previously relied on FedEx, UPS, and other delivery services, but now with over 1 million employees, Amazon has greatly impacted other delivery services by diverting the majority of delivery methods to Amazon’s own employees. Amazon’s actions, as well as the actions of other companies, have created great unrest among the American government.

The House Antitrust Subcommittee heard testimony from Amazon, Apple, Facebook, and Google in July. The hearing involved longstanding allegations of antitrust violations. Among other things, Amazon was being accused of using predatory pricing to drive Diapers.com out of business. Amazon’s vice president of consumables, Doug Harrington said in an email, “we need to match pricing on these guys (Diapers.com) no matter the cost.” Amazon eventually bought the company and a few years later shut it down.

It appears that certain companies have seen the pandemic not as a pit in which to fall, but rather as a ladder to ascend higher. According to the Washington Post, over 100,000 businesses have already closed their doors, with many more expected to follow. But have we not seen this before? After the end of the Black Death in Europe, there was an outpour of commercialization. The nation of Germany saw the growth of Wesler, which “combine[d] growing flax with owning the looms on which workers span that flax into linen cloth.” This was a unique way of making clothes that appears to not have been done prior to the Black Death plague.

While many companies are struggling to survive, others such as Amazon, have found a way to make the pandemic work to their profitability. These companies have been utilizing the chaos of the pandemic to ensure that they are not only surviving but rising higher than what would have been possible prior to the Coronavirus pandemic. This wide-reaching centralization of industries could have drastic effects on the world economy for years to come.

 

R. Daniel Johnson is a second-year law student at Wake Forest University School of Law. His undergraduate degree is in business/prelaw at Oral Roberts University. Upon graduation, Daniel Hopes to pursue a career in mergers and acquisitions.