California Sues Amazon Over Alleged Antitrust Violations, Inflated Prices

California Sues Amazon Over Alleged Antitrust Violations, Inflated Prices

The state of California has sued Amazon.com, claiming that the online retail giant’s contracts with third-party sellers and wholesalers resulted in inflated prices for goods, stifled competition, and violate the state’s antitrust and unfair competition laws, the Wall Street Journal reports.

According to a Wednesday statement by AG Rob Bonta, the lawsuit was filed in San Francisco Superior Court and seeks to halt Amazon policies he claims prevent merchants from offering lower prices via competitors’ websites.

The suit asks the court to block Amazon from continuing those policies and to appoint a monitor to ensure the company’s compliance, according to a copy viewed by The Wall Street Journal. It also seeks unspecified damages for harm to the state economy and $2,500 for each violation of the state’s civil and professional code proved at trial.

The lawsuit represents the biggest legal challenge to date in the U.S. for Amazon, which was previously sued by the District of Columbia and is being investigated by the Federal Trade Commission, the European Union and a congressional committee. -WSJ

Third-party merchants make up the majority of Amazon’s product sales, according to the complaint, which states that Amazon requires said sellers to sign agreements which penalize them for undercutting their Amazon.com pricing at other websites such as Walmart.com and Target.com, which also provide a robust platform for third-party merchants. Sellers who refuse to comply may get de-ranked in Amazon’s search results, or even face disqualification from the site’s “buy box,” according to the lawsuit.

Amazon’s agreements also penalize wholesalers when the company lowers its prices to match those of its competitors, and profit margins fall below a specified minimum. In some cases, Amazon demands that the wholesalers compensate the company if competing retailers lower prices on their products, the complaint alleges.

“Amazon coerces merchants into agreements that keep prices artificially high, knowing full-well that they can’t afford to say no,” Bonta said in a statement. “Many of the products we buy online would be cheaper if market forces were left unconstrained.”

In a response to a similar case brought last year in Washington DC, Amazon claimed that its policy towards merchants that sell on other platforms is designed to protect consumers from being overcharged – and that they decide which third-party merchants to feature based on other factors, including price and delivery speed. The DC case – which has since been thrown out by a Superior Court judge following Amazon’s motion to dismiss – didn’t address wholesalers.

The lawsuit also follows a bipartisan letter from members of the House Judiciary Committee asking US AG Merrick Garland to investigate Amazon and some of its executives for possible criminal obstruction of justice related to a separate investigation into Amazon and other big tech firms, per the WSJ.

Tyler Durden
Wed, 09/14/2022 – 17:20

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