California on Wednesday sued Amazon for violating antitrust laws by threatening to punish sellers if they list goods for a lower price on another platform.
According to Attorney General Rob Bonta, Amazon is accused of avoiding competition with other e-commerce sites by requiring sellers to sign agreements not to sell their products for less on other sites, such as Walmart, Target, eBay and their personal websites. .
Bonta said the company is aiming for “domination in the online retail market” and in doing so has pushed prices up and harmed consumers.
“For years, consumers in California have paid more for their online purchases because of Amazon’s anti-competitive contract practices,” Bonta said.
“Amazon forces traders into agreements that keep prices artificially high, knowing full well that they can’t afford to say no.”
As a result, the lawsuit alleged that the lack of price competition online causes prices to stabilize at a higher cost.
Amazon claimed Bonta had it “backwards” and hopes the lawsuit will be dismissed soon.
“Sellers set their own prices for the products they offer in our store,” an Amazon spokesperson told DailyMail.com. Amazon prides itself on offering low prices across the widest range, and like any store we reserve the right not to flag offers to customers that are not competitively priced.
“The relief the AG seeks would force Amazon to offer higher prices to consumers, which strangely goes against the core objectives of the antitrust law.”
California officials on Wednesday sued Amazon for claiming the company contributed to high-cost products across the state
Attorney General Rob Bonta said merchants on Amazon are being “forced” into agreements not to sell their goods elsewhere in an effort to keep their prices high
The 84-page lawsuit was filed Wednesday in the San Francisco Superior Court
Pictured: Amazon headquarters in Washington. The company said Bonta had its claims “backwards”
Amazon is further accused of forcing merchants to abide by the company’s “demands” while taking advantage of high product prices and seller fees, the lawsuit said.
Sellers Claimed ‘Amazon’ [would] decline offers” for selling their products elsewhere at a lower cost.
“Since the cost of selling on these other websites is lower, my customers like to offer lower prices on them,” said one salesperson. “However, my customers do not offer lower prices on those websites, as this would lead to the suppression of the Buy Box for their Amazon listing.”
Another seller added, “We have nowhere else to go and Amazon knows it. If we lose 90 percent of our sales because we are suspended from Amazon, the company will essentially cease to exist.
“We’re stuck with Amazon. We need those sales to continue the business as we do now.’
Meanwhile, one of the retail giant’s competitors said that “buyers are locked into their platform.”
“You have no choice but to make a deal with the devil,” said one competitor. “You are one message away from being shut down and losing your livelihood. Amazon doesn’t care about you.’
Bonta said consumers have limited purchasing options as a result of Amazon’s policies.
“Because other ecommerce platforms are unable to compete on price, consumers are turning to Amazon as a one-stop shop for all their purchases,” Bonta said. “This perpetuates Amazon’s dominance in the marketplace, allowing the company to place increasingly unsustainable demands on its merchants and cost consumers more at checkout across California.”
Bonta continues: ‘The reality is: many of the products we buy online would be cheaper if market forces were not restricted.’
Sellers Claimed ‘Amazon’ [would] disqualify their products because they sold them elsewhere at a lower cost
Bonta Claims Amazon Violated Unfair Competition Act and Cartwright Act
The lawsuit seeks to “recover the harm to California consumers” and the economy, and Ban Amazon from entering into ‘anti-competitive’ trade agreements.
If successful, Amazon will also be required to “compensate for consumer harm by raising prices” and “repay its ill-gotten gains and pay fines.”
The company will further have to inform merchants that they do not have to sell their goods for the same or higher price on other e-commerce websites.
The lawsuit seeks to ban Amazon from entering into ‘anti-competitive’ trade agreements that result in a rise in competitive prices
Amazon is a prominent online store with over 160 million Prime members in the US. About 25 million of those members live in California.
About 96 percent of Amazon Prime members said they are significantly more likely to buy goods from Amazon rather than another online store, according to one questionnaire.
More than 70 percent of shoppers reported that they immediately went to Amazon in search of a specific product.
“We have nowhere else to go and Amazon knows that,” one buyer said in the lawsuit.
Approximately 25 million Prime members live in California
The California lawsuit follows another filed in Washington DC in 2021 that was unsuccessful. The legal challenge made the same allegations.
Amazon has used its dominant position in the online retail market to win at all costs. It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation and illegally tilting the playing field in its favor,” Attorney General Karl Racine said at the time.
The lawsuit was ultimately dismissed in March, but an appeal has been filed.