Amazon violates California antitrust laws by penalizing marketplace vendors for offering cheaper prices on other websites, Attorney General Rob Bonta alleges in a new lawsuit against the company.
“Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price,” Bonta alleges in a complaint brought Wednesday in San Francisco County Superior Court.
The lawsuit largely centers on Amazon's pricing restrictions on outside marketplace vendors.
Between 2012 and 2019, Amazon's contracts with vendors included a “price parity” provision that prohibited them from offering products at cheaper prices anywhere else online -- including their own websites as well as retailers like Target.com -- according to the complaint.
Amazon stopped using that provision in its contracts in 2019, but according to the complaint, replaced the price-parity clause with a comparable “fair pricing” policy.
Bonta adds in the complaint that regardless of the language in Amazon's written policies, the company “strictly enforces a de facto retail price parity agreement by imposing escalating penalties on sellers that fail to comply with price parity,” until they comply.
“These sanctions have included disqualifying them from winning the 'Buy Box,' ... demoting their offers to the bottom of Amazon’s organic search results, and blocking them from creating new offers in their third-party seller accounts,” the complaint alleges.
The attorney general argues that Amazon's policies keep prices artificially high for consumers, while also preventing competing online stores to “gain any significant market share by providing customers with lower prices.”
Amazon says Bonta “has it exactly backwards.”
“Sellers set their own prices for the products they offer in our store,” a company spokesperson says. “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.”
Bonta isn't the first attorney general to sue Amazon over these allegations. Last year, Washington, D.C. Attorney General Karl Racine brought a similar complaint against the company.
That case was dismissed in March by District of Columbia Superior Court Judge Hiram Puig-Lugo. He said Racine's complaint didn't include the kinds of factual allegations that would warrant further proceedings.
“The District simply repeated vague conclusion after vague conclusion devoid of facts to support the vague conclusions it repeatedly stated,” Puig-Lugo wrote in that matter.