California sued Amazon for antitrust violations, in line with a press release by the state’s lawyer general Rob Bonta. The lawsuit specifically focuses on Amazon’s longstanding practices of prohibiting price competition.
“The reality is: Many of the products we buy online would be cheaper if market forces were left unconstrained,” Bonta said in a statement. “With today’s lawsuit, we’re fighting back. We won’t allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy.”
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The lawsuit centers around a state of affairs that has been widely known for years, that Amazon coerces merchants who use the wildly popular online shopping platform into entering agreements that either prohibit or severely punishes them from offering their products at lower prices through other merchants or their own websites. The press release says merchants who don’t do this “face sanctions such as less prominent listings and even the possibility of termination or suspension of their ability to sell on Amazon.” Due to Amazon’s market dominance, many merchants cannot survive unless they sell on Amazon. The end result is merchants have to sell their products everywhere for a price that reflects Amazon’s inflated fees, and other online retailers cannot compete with Amazon by offering lower listing fees.
California is requesting the court prohibit Amazon from entering into such agreements in the future, notify merchants that it no longer requires them to sell for the same price on all platforms, appoint a monitor to make sure Amazon complies with the rulings, order damages, and order Amazon to return “its ill-gotten gains and pay penalties to serve as a deterrent to other companies contemplating similar actions.”
An Amazon spokesperson told Motherboard via email, “Similar to the D.C. Attorney General—whose complaint was dismissed by the courts—the California Attorney General has it exactly backwards. Sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law. We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly.”