California Sues Amazon For Antitrust Violations

Words by Retail Bum

California Sues Amazon For Antitrust Violations
California Sues Amazon For Antitrust Violations

The state of California has sued Amazon for allegedly forcing sellers and suppliers to sign anticompetitive deals that result in higher prices on the company’s platform and third-party websites.

The lawsuit, which Attorney General Rob Bonta has filed, poses the most significant legal challenge the eCommerce giant has faced in its home market in recent years.

“Amazon makes consumers think they are getting the lowest prices possible,” the lawsuit alleges, “when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price.”

In the lawsuit, the state has also accused Amazon of creating a vicious anticompetitive cycle, wherein sellers see Amazon as an indispensable sales channel, allowing it to charge them a higher seller fee. In turn, sellers raise the prices of products both on Amazon and other eCommerce platforms.

And sellers that still choose to sell items at a lower price on other retail websites such as Walmart and Target are penalized by Amazon by either displaying their products less prominently or blocking their new product listings, NPR reported.

“Through its illegal actions, the quote, “everything store” has effectively set a price floor, costing Californians more for just about everything,” Bonta said.

Amazon has denied the allegations, pointing to a similar case in dismissed in Washington D.C.

“Sellers set their own prices for the products they offer in our store,” the company said. “Like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

Amazon recently settled an antitrust violation case in the EU, where the company was accused of using third-party seller data for its benefit.

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