California Attorney General Rob Bonta announced a lawsuit against Amazon alleging that the company stifled competition and caused increased prices across California through anticompetitive contracting practices in violation of California’s Unfair Competition Law and Cartwright Act.
Further information includes:
In order to avoid competing on prices with other online e-commerce sites, Amazon requires merchants to enter into agreements that severely penalize them if their products are offered for a lower price off-Amazon. In today’s lawsuit, Attorney General Bonta alleges that these agreements thwart the ability of other online retailers to compete, contributing to Amazon’s dominance in the online retail marketplace and harming merchants and consumers through inflated fees and higher prices.
“For years, California consumers have paid more for their online purchases because of Amazon’s anticompetitive contracting practices,” said Attorney General Bonta. “Amazon coerces merchants into agreement that keep prices artificially high, knowing full well they can’t afford to say no. With other e-commerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases. This perpetuates Amazon’s market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California…”
The Attorney General provided information about the lawsuit against Amazon and requested relief:
The Attorney General’s lawsuit seeks an order from the San Francisco Superior Court that stops Amazon’s anticompetitive behavior and recovers the damages to California consumers and the California economy. Specifically, the lawsuit asks the Court to:
- Prohibit Amazon from entering into and enforcing its anticompetitive contracts that harm price competition;
- Require Amazon to affirmatively notify vendors that it does not require sellers to offer prices on par with off-Amazon prices;
- Appoint a Court-approved monitor, to ensure Amazon’s compliance with the Court’s order;
- Order damages to compensate for the harms to consumers through increased prices; and
- Order Amazon to return its ill-gotten gains and pay penalties to serve as a deterrent to other companies contemplating similar actions.
The Wall Street Journal reported that the suit is the result of an investigation the began in early 2020. It seeks unspecified damages for harm to the state economy and $2,500 for each violation of the state’s civil and professional code proved at trial.
According to The Wall Street Journal, the lawsuit represents the biggest legal challenge to date in the U.S. for Amazon, which was previously sued by the District of Columbia and is being investigated by the Federal Trade Commission, the European Union, and a congressional committee. Because California is the nation’s most populous state and biggest economy, its business regulations have long swayed how companies operate across the country, The Wall Street Journal reported.
If things work out the way Attorney General Bonta wants them to, I think it will could cause other states to create similar lawsuits against Amazon. The result could potentially make it less expensive for people to buy products from Amazon.