Seattle District Judge Richard A. Jones denied part of Amazon’s motion to dismiss an antitrust class action complaint, clearing the way for a court battle in which Amazon will defend its pricing policy for third-party sellers.
The decision marks a turning point in Amazon’s antitrust battle. Just as two significant congressional antitrust bills seem to be stalling, two credible court cases are gaining traction. The Seattle District Court ruling could work in tandem with a lawsuit filed by D.C. Attorney General Karl A. Racine, which similarly alleges that Amazon’s third-party seller policies lead to higher consumer prices.
Up until March 2019, the Amazon Services Business Solutions Agreement included a “price parity” provision that required sellers to ensure “the purchase price and every other term of sale … is at least as favorable to Amazon Site users as the most favorable terms.” Amazon got rid of this provision after the Federal Trade Commission threatened to launch an investigation.
The class-action lawsuit alleges that Amazon still pressures sellers to maintain price parity on its platform. Under a “fair pricing” provision, Amazon monitors the prices of items on other marketplaces and punishes sellers if they don’t give Amazon the best terms, according to the plaintiffs. As punishment, Amazon has the ability to hide the one-click-buy button, delete seller listings, limit shipping availability and even boot the seller from the platform entirely.
So if Amazon is fighting for the lowest prices, why are the plaintiffs arguing this is bad for consumers? It has to do with fees. Amazon charges third-party sellers a higher fee than some of its competitors. A seller might be inclined to lower prices on platforms that charge lower fees, but because of Amazon’s pricing policy, there’s pressure to not do so.
The plaintiffs allege that some sellers generate 81% to 100% of their revenue from Amazon, which gives the ecommerce company significant leverage to demand pricing compliance. One seller noted, “[We] have nowhere else to go and Amazon knows it.”
This lawsuit signals a shifting backdrop for Amazon’s antitrust battle. The two major antitrust bills proposed by Congress — the Open App Markets Act (S. 2710) and the American Innovation and Choice Online Act (S. 2992) — might not even make it to a vote. Last week, Sen. Chuck Schumer reportedly told proponents of the bills, including Sen. Amy Klobuchar, to prove they could garner 60 votes; only then would Schumer bring the bills to the floor. House Speaker Nancy Pelosi likewise hasn’t publicly committed to putting the antitrust bills on the floor. Antitrust seems to be falling down the list of priorities in D.C., given the fast-approaching midterms and the prioritization of the war in Ukraine and Supreme Court confirmation of Judge Ketanji Brown Jackson.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE