New Jersey sues $3 trillion Amazon over monopsony suppressing driver pay

New Jersey Attorney General Jennifer Davenport filed a federal antitrust lawsuit Tuesday accusing Amazon of wielding "monopsony" power over its delivery contractor network to suppress driver wages, the first such state case.

"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," Davenport said in a statement.

The complaint, filed in U.S. District Court for the District of New Jersey, centers on Amazon's Delivery Service Partner program, launched in 2018, which relies on thousands of small contracted companies for last-mile delivery. Davenport accuses Amazon of holding a monopsony — a market in which a single buyer dominates a labor market — over delivery driver services. The state alleges DSP drivers earn less than workers at UPS, FedEx and the U.S. Postal Service while facing electronic monitoring and delivery quotas. Amazon also barred contractors from poaching one another's drivers, a "no-poach" restriction the state argues stifles wage competition across the network.

Davenport is seeking treble damages for lost compensation, a court order barring the alleged anticompetitive practices, and preliminary injunctive relief to prevent Amazon from terminating additional delivery contractors during the litigation. The suit adds to scrutiny of Amazon's delivery model; New York City is considering a bill that would compel Amazon to bring its delivery service partners on as direct employees, and Amazon has warned it could pull its delivery operations from the city.

The lawsuit names Amazon, Amazon.com Services LLC and Amazon Logistics Inc., and alleges violations of Sections 1 and 2 of the federal Sherman Antitrust Act as well as the New Jersey Antitrust Act. It is the first monopsony conduct complaint of its kind brought by a state, according to the attorney general's office.

The complaint describes events at an Amazon delivery station in Queens, New York, where the company allegedly cut routes, shed workers, and eventually ended its relationship with a contractor after union organizing. State officials contend Amazon's control extends to the routes drivers take, the uniforms they wear, the software they use and the branded delivery vans they operate, leaving DSPs unable to compete by offering higher wages or improved working conditions.

Amazon disputed the allegations. "The complaint is not grounded in fact," the company said, adding that claims about working conditions are "just wrong." Amazon maintained that its delivery service partners run their own businesses, controlling decisions across their operations, and are free to contract with carriers beyond Amazon. Steve Kelly, a spokesman for Amazon, said drivers are independent business owners who make their own decisions about hiring, fleet management and capacity planning.

Broader Regulatory Pressure Mounts

The suit is one of several pending New Jersey cases against Amazon. The state has joined a Federal Trade Commission antitrust case accusing the company of restricting competition among online retailers, and has separately accused Amazon of discriminating against pregnant workers and employees with disabilities and of improperly treating drivers in its Flex delivery program as independent contractors. A trial court recently denied Amazon's motion to dismiss the civil rights case.

The legal pressure comes as Amazon's market value has climbed past $3 trillion, according to CNBC, a scale that regulators are targeting. If Davenport prevails, Amazon could be forced to change how it compensates delivery drivers across its DSP network, potentially raising operating costs for a program that handles a growing share of the retailer's last-mile deliveries. The case also sets a precedent for other states weighing similar monopsony claims against dominant employers.

This article is for informational purposes only and does not constitute investment advice.