This past Wednesday, Amazon found itself the target of a lawsuit filed by California that makes the claim that the company heavily inhibits price competition through its practices.
Rob Bonta, the Attorney General for California, filed an antitrust suit targeting Amazon. The suit in question only applies to the dealing within California, but if it goes through, it could create a precedent and have a major impact all over the nation.
“If you think about Californians paying even just a little bit more for every product they purchased online over the course of a year, let alone a decade, which is what is at issue here, the collective magnitude of harm here is very far-reaching,” stated Bonta as part of a press conference, read a report from The New York Times. “The everything store has effectively set a price floor, costing Californians more for just about everything.”
This lawsuit alleges that Amazon has taken actions that could be seen as direct violations of California antitrust laws in such a way that hurts the consumer and limits competition.
“The policy and spirit of the California antitrust laws are to promote the free play of competitive market forces and the lower prices to consumers that result,” stated the lawsuit. “Amazon, the dominant online retail store in the United States, has violated the policy, spirit, and letter of those laws by imposing agreements at the retail and wholesale level that have prevented effective price competition across a wide swath of online marketplaces and stores.”
This particular suit focuses on just how Amazon assigned punishments against people that sell on the site if they put their items on other websites as well at a different cost, explained the Times. If the company sees the same product on a different website for a competitor, more often than not it will remove features for the seller such as the “Buy Now” button and the “Add to Cart” feature, which drastically drops the overall sales totals for the businesses trying to use Amazon.
When sellers are forced to agree that they will not allow lower prices to be shown on any other site, the result is that the prices for the average customer end up being high than they would see when the market is left to natural fair competition, explained the lawsuit.
“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,” explained the suit.