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California attorney general accuses Amazon of anti-competitive pricing

·2-min read

California's attorney general, Rob Bonta, has filed a lawsuit against Amazon for allegedly anti-competitive pricing in violation of the California Unfair Competition Law and the Cartwright Act, California's primary antitrust law. The complaint, filed in San Francisco Superior Court, accuses the company of contractually prohibiting third-party sellers from offering lower prices on platforms other than Amazon, forcing customers to pay artificially inflated prices online.

According to the lawsuit, which cites interviews with sellers, competitors and industry consultants conducted over several years, Amazon often removes buttons like "Buy Now" and "Add to Cart" from product listings if it spots the products listed cheaper at a competitor site, like Walmart or Target. Because those buttons are a top driver of sales, third-party merchants are incentivized to raise prices at other marketplaces rather than risk losing their sales on Amazon, the lawsuit says.

The attorney general is seeking a court order blocking Amazon from continuing the alleged practice as well as fines.

California represents a relatively small portion of Amazon's 76.6-million-strong customer base; an estimated 25 million customers live in the state. But as The New York Times notes, it could have a broad impact across the country if it succeeds. Amazon controls roughly 38% of online sales in the U.S., -- more than that of eBay, Walmart, Best Buy, Apple and Target combined, according to the research firm Insider Intelligence.

Other legal efforts against Amazon's contractual terms haven't moved the needle too much. A lawsuit similar to California's brought by Karl Racine, the attorney general for the District of Columbia, was thrown out this spring after a judge found it lacked sufficient evidence Amazon's policies were anticompetitive. (Racine intends to appeal.)

“Similar to the D.C. attorney general -- whose complaint was dismissed by the courts -- the California attorney general has it exactly backward," Alex Haurek, an Amazon spokesman, told The New York Times in a statement, responding to the allegations. "Sellers set their own prices for the products they offer in our store."

Other investigations are in the works, however, including one spearheaded by Federal Trade Commission chairwoman Lina Khan that seeks to uncover instances of antitrust violations by Amazon and whether the company's Amazon Prime membership cancellation process is deliberately confusing. Overseas, Amazon has long been the subject of antitrust scrutiny from the European Commission, the executive branch of the European Union, which has said that the company boxes out competitors, develops first-party products using proprietary third-party seller data and pressures merchants to use its logistics services.