Picture: REUTERS/PASCAL ROSSIGNOL
Picture: REUTERS/PASCAL ROSSIGNOL

Amazon.com was sued by the attorney-general for Washington, DC, who accused the online retail giant of engaging in anticompetitive practices that have raised prices for consumers.

Amazon’s policies governing third-party sellers prohibit them from offering products at lower prices on rival platforms, which has led to artificially high prices for consumers and let the company build monopoly power, attorney-general Karl Racine said.

“Amazon is increasing its dominant stronghold on the market and illegally reducing the ability of other platforms to compete for market share,” Racine said on Tuesday on a conference call with reporters announcing the case.

Amazon shares fell 0.8% to a session low on the news and were little changed at 1.11pm in New York.

“The DC attorney-general has it exactly backwards — sellers set their own prices for the products they offer in our store,” a company spokesperson said in an e-mail. “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.”

Amazon said the outcome Racine is seeking in the case would force the company to post higher prices, “oddly going against core objectives of antitrust law”.

The antitrust lawsuit follows a flurry of investigations and lawsuits targeting America’s biggest tech companies. Facebook and Alphabet’s Google were sued by state and federal officials in 2020 in monopoly cases, while a House investigation accused the two companies along with Amazon and Apple of abusing their dominance in digital markets.

More cases may be on the way. The attorneys-general for California and New York and the Federal Trade Commission (FTC) have been investigating Amazon, Bloomberg has reported, while the justice department has been probing Apple.

Racine filed the Amazon case on his own, rather than teaming with other states, which is a common practice for attorneys-general. He said he didn’t know whether other states would join and said he hasn’t co-ordinated with the FTC.

The lawsuit focuses on so-called most-favoured nation agreements, which prevent third-party merchants from selling at a lower price somewhere else, including their own websites, Racine said. The agreements mean the fees Amazon charges to sellers are incorporated into the prices sellers charge on Amazon and on competing platforms online, Racine said.

Amazon merchants and their consultants in 2019 told Bloomberg that Amazon’s policies  forced them to raise prices on other sites such as Walmart. If Amazon detected lower prices on other sites, it would bury their products in Amazon search results, where they got most of their sales. Some of the merchants were eager to grow their sales on other sites, but Amazon’s policies prevented them from offering lower prices elsewhere to lure shoppers away.

The lawsuit is the sixth antitrust case against a major US tech company filed in the past year by state and federal officials. The justice department and a group of states sued Google in 2020, accusing the company of abusing its dominance in internet search. That case was followed by two separate complaints against Google filed by other states over search and digital advertising. The FTC and a nationwide coalition of states sued Facebook in December in separate complaints that seek to break up the company.

Bloomberg News. More stories like this are available on bloomberg.com

subscribe

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.