California’s attorney general filed a lawsuit against Amazon, alleging that the company had limited third-party sellers on its platforms by requiring them to sign deals that would limit their ability to adapt prices to the market.
California Attorney General Rob Bonta announced Wednesday that the state was suing Amazon for inflating its prices by signing restrictive deals with companies that it partners with on its platforms. These practices have helped Amazon entrench itself as the dominant seller in the marketplace and violate the state’s Unfair Competition Law and the antitrust-focused Cartwright Act, he alleged.
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“Amazon coerces merchants into deals that keep prices artificially high, knowing full well they have no real alternative,” Bonta said in a tweet. “We won’t let Amazon bend the market to its will at the expense of consumers and the economy.”
Bonta said at a press conference that an investigation from his office found that sellers on Amazon’s platform were not allowed to lower their prices due to agreements they signed with Amazon to get on the platform. This limitation on price control often meant that California consumers were overcharged.
Bonta requested that the Superior Court in San Francisco declare California’s actions unlawful, that it require Amazon to notify vendors that it does not require sellers to offer prices on par with off-Amazon prices, that it appoint a monitor to ensure the company’s compliance, and that it make Amazon compensate the state and the affected sellers accordingly.
Amazon responded by arguing that the lawsuit in question would hurt consumers, not help them. “Amazon takes pride in the fact that we offer low prices across the broadest selection,” a company spokesperson told the Washington Examiner. “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. ”
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The lawsuit is the latest legal slam on Amazon amid growing scrutiny from regulators in the United States and Europe over the platform’s dominant presence in everyday life. The Big Tech company’s dealings have been under heavy scrutiny from the Federal Trade Commission to the point of Amazon accusing the FTC of “harassing” the company’s executives as part of its investigation into Amazon Prime.
