California filed a lawsuit against Amazon on Wednesday that accuses the Seattle tech giant of violating antitrust laws.
Amazon has faced increasing antitrust-related scrutiny in recent years from government agencies across the globe, but this suit represents “the biggest legal challenge to date” for Amazon, according to The Wall Street Journal.
The lawsuit, filed in San Francisco Superior Court, alleges that Amazon forces third-party sellers and suppliers to enter into “anticompetitive agreements on price” that allegedly prevent them from offering their products at lower prices on competitor sites. Sellers face “drastic penalties” if the agreements are violated, such as lower placement on Amazon’s retail site, according to the suit.
The suit alleges that the agreements “insulate Amazon from price competition, entrenching Amazon’s dominance, preventing effective competition, and harming consumers and the California economy.”
“Without basic price competition, without different online sites trying to outdo each other with lower prices, prices artificially stabilize at levels higher than would be the case in a competitive market,” the suit notes. “Competing sites do not offer lower prices the way they would in a competitive market, not because Amazon competed successfully, not because Amazon is a more efficient retailer and marketplace, but because Amazon forbids it by contract.”
Amazon faced a similar suit last year, filed by the District of Columbia, which was dismissed by a district judge earlier this year and is now in an appeals process. That suit leaned heavily on findings from a U.S. House antitrust report from 2020.
The California suit, which stems from a two-year long investigation, aims to block Amazon from enacting such policies and asks that the company is monitored to ensure compliance, in addition to a civil penalty of $2,500 for each violation of California’s competition rules.
“The reality is: Many of the products we buy online would be cheaper if market forces were left unconstrained. With today’s lawsuit, we’re fighting back,” California AG Rob Bonta said in a press release. “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.”
We’ve reached out to Amazon for comment. Update: Here’s a statement from Amazon:
“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.”
Third party sellers were responsible for 57% of units sold on Amazon in the most recent quarter, a record high.
Lawmakers have increasingly discussed new antitrust regulations for tech giants such as Amazon and Apple as the companies continue to grow. A bipartisan Big Tech antitrust bill is currently in limbo.
Read the full suit below:
California AG sues Amazon, … by GeekWire
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