The Federal Trade Commission has filed a lawsuit against Amazon, claiming the company is abusing its power to keep prices high and restrict competition.

The FTC accused Amazon of using illegal business tactics "to inflate prices, degrade quality, and stifle innovation for consumers and businesses."

"The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance," the agency said in a statement announcing the lawsuit.

The FTC said that Amazon forced third-party sellers to pay costly fees that could account for 50% of their total revenue.

"These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business," the FTC said.

Amazon slammed the FTC's lawsuit in a statement.

"Today's suit makes clear the FTC's focus has radically departed from its mission of protecting consumers and competition. The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon's store," said David Zapolsky, Amazon's Senior Vice President of Global Public policy and General Counsel. "If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do. The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court."

Bill Cunningham