California sued Amazon.com saying the company forces third-party merchants to agree to policies that lead to “artificially high prices” for consumers.
State Attorney General Rob Bonta on Wednesday announced the antitrust suit challenging Amazon merchant agreements that bar sellers from offering lower prices on other sites and impose stiff penalties if they do. He said the agreements block competition from other online retailers, resulting in inflated fees for merchants and higher prices for consumers.
“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. The suit, filed in state court in San Francisco, seeks an order blocking Amazon from continuing to engage in anticompetitive behavior and compensation for California consumers.
The suit comes three years after reports surfaced that the company’s pricing policies were forcing sellers to raise their prices on competing sites like Walmart because if they offered lower prices on other sites Amazon would bury their products in search results.
Bonta’s suit similarly stressed that merchants risked less prominent placement on Amazon or even removal from the site if they charged less on rivals like Walmart, Target, eBay, and, in some instances, their own websites.
It’s not the first time that Amazon’s policy towards merchants has drawn scrutiny. The California suit is similar to one filed last year by Washington, D.C., Attorney General Karl Racine. A judge dismissed the suit last year, but Racine is trying to revive the case on appeal. The Justice Department submitted a brief in support of Racine’s appeal, saying the judge who dismissed it misapplied antitrust law.
“Similar to the D.C. attorney general — whose complaint was dismissed by the courts — the California attorney general has it exactly backwards,” Amazon representative Alex Haurek said in a statement Wednesday. “Sellers set their own prices for the products they offer in our store.” Haurek said the relief Bonta was seeking “would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
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