California files antitrust lawsuit against Amazon

The California attorney general filed an antitrust lawsuit against Amazon on Wednesday, claiming the retailer is stifling competition and increasing the prices that consumers pay online.

The lawsuit is limited to California, where officials said Amazon has about 25 million customers, but if successful, it could have a broad impact across the country.

“If you consider Californians paying a little bit more for every product they bought online over the course of a year, let alone a decade, which is at issue here, the collective scale of the damage here is very far-reaching,” said Rob Ponta, state attorney general for California. , during a press conference to announce the case.

“The ‘everything’ store has set a minimum price, which is costing Californians more for just about everything,” he said.

The lawsuit largely focuses on the way Amazon penalizes sellers for listing products at low prices on other websites. If Amazon discovers a product listed at a cheaper price on a competitor’s website, it often removes important buttons like “buy now” and “add to cart” from the product listing page.

These buttons are a major driver of sales for companies that sell through Amazon, and losing them can quickly damage their business.

This creates a dilemma for sellers in the market. Sometimes they can offer products at lower prices on sites other than Amazon because the cost of using these sites can be lower. But since Amazon is by far the largest online retailer, sellers would rather raise their prices on other sites than risk losing their sales on Amazon, which is the complaint He saidciting interviews with vendors, competitors, and industry consultants.

“Without basic price competition, and without different Internet sites trying to outperform each other at lower prices, prices are artificially settling at higher levels than they would in a competitive market,” the complaint said.

The California lawsuit is the latest in a series of increasingly aggressive efforts by states and regulators in Washington and Europe to reduce the influence of the technology industry’s largest. Wednesday too, a The Court of the European Union has given its blessing to a record multi-billion dollar fine issued against Google in 2018.

Given the size of California’s economy and Amazon’s role in it, “this part of the litigation has important national implications,” said Christopher R. Leslie, professor of antitrust law at the University of California, Irvine. He said that if antitrust allegations prevailed, “there would be no way other countries would not sue and file other cases.”

The suit echoes a issue Racine, the District Attorney for the District of Columbia, and that was Fired This spring. Judge Hiram E. Puig Lugo of the District of Columbia Supreme Court that Mr. Racine did not provide sufficient evidence that Amazon’s policies were anti-competitive. Mr. Racine is appealing the ruling.

“Similar to the Washington attorney general — whose complaint was dismissed by the court — the California attorney general has the exact opposite,” Alex Horik, an Amazon spokesperson, said in a statement. “Sellers set their own prices for the products they offer in our store.”

Mr. Horik said Amazon hopes to dismiss the lawsuit, and is proud to offer low prices “across the widest selection, and like any store, we reserve the right not to highlight offers to customers that are not priced competitively.”

Most of Amazon’s sales — 57 percent of units last quarter — are products offered by third-party merchants on its website. They pay Amazon a referral fee to list their products, and they often pay for Amazon fulfillment services, advertising, and other offers. Amazon has collected more than $100 billion in third-party service fees in the past 12 months, according to it Financial deposits.

California was checking Amazon more than two years, and the complaint filed in San Francisco Supreme Court, said the practices violated California’s Unfair Competition Act and the Cartwright Act, the state’s primary antitrust law. He demanded remedies including ending anti-competitive behavior and paying penalties.

Mr. Horik said the assistance requested in the case “would force Amazon to offer customers higher prices, which would oddly run counter to the core objectives of antitrust law.”

Mr. Ponta said he believes the case will work as the District of Columbia stumbled by providing more details about how Amazon is hurting consumers. There is more research, he said, “than in any other case I’ve ever seen,” adding that California law offers some additional protections.

The complaint said Amazon was able to charge sellers more fees than competitors because it commanded so many online sales. The increased costs for sellers include fulfilling advertising and paying for advertising, which sellers increasingly see as a necessity for success. The complaint strongly cites redacted internal Amazon documentation.

The complaint says the result is an “anti-competitive cycle,” in which sellers have to raise prices on Amazon to recoup their costs. But because of Amazon’s pricing terms, sellers must have higher prices on other sites, and “other online stores cannot effectively lure consumers away from Amazon at lower prices.”

Mr. Ponta’s complaint quoted emails between a personal care electronics brand and another retailer, asking the retailer to raise prices on a discounted item because Amazon canceled its listing. She wrote that the brand wanted to “remove all deals and inventory through the first quarter because this has happened so many times and has caused significant disruption to Amazon’s business.” “We simply can’t stand the shutdowns of Amazon’s buying division any longer.”

The complaint stated that the seller was no longer supplying the products to the competitor.

Mr. Leslie, the law professor, said the “meat” complaint made a compelling case, likely bolstered by revised evidence, that “if the market is left to operate without Amazon’s anticompetitive policies, consumers can benefit from Amazon’s lower overseas prices.” He said the case still faced hurdles, given the new issues it had raised.

Nationally, the Federal Trade Commission led Lina Khan, Amazon CriticCheck whether Amazon has violated antitrust laws. The agency is also looking into the process by which consumers purchase or cancel an Amazon Prime membership, which Some say It can be intentionally confusing.

Last month, Amazon moved to stop The agency’s requests to interview Jeff Bezos, founder of Amazon, and its CEO, Andy Gacy, in the main investigation on the grounds that the requests “calculated to serve no other purpose than to harass senior Amazon executives and disrupt its business operations.”

Lawmakers in Washington put Amazon in their sights. The company has vigorously fought a bipartisan antitrust bill that would prevent Amazon from favoring its own products on its online store. Suggestion Passing Chances It may dwindle further as lawmakers turn their attention to the midterm elections.

Amazon has been more diplomatic in other cases. Facing an investigation into retail practices in Europe, the company Suggest a series of changesincluding limiting the data it collects from competing sellers and allowing them to sell to Prime customers without using Amazon’s logistics program.