California Attorney General Rob Bonta has sued Amazon, alleging the company prevents price competition by punishing merchants and third-party sellers when they offer lower prices anywhere aside from Amazon's website, including with competitors such as Best Buy and Walmart.
The suit, following in the footsteps of similar investigations in the U.S. and internationally, alleges that customers pay artificially high prices because Amazon is creating a restraint against natural market competition on cost. The suit also claims that Amazon gains an unfair market advantage because no other commerce site can compete on price, making Amazon a one-stop shop for consumers and further cementing the company's market dominance.
The press release announcing the suit claimed sellers would like to offer lower prices on other sites, because those sites charge lower listing fees and often vendors pass along fee savings to the consumer when they can afford to do so. But Amazon uses its market dominance to enforce rules that make doing so impossible, the suit claims, even though Amazon's fees are allegedly higher than competitors'.
"Merchants that do not comply face sanctions such as less prominent listings and even the possibility of termination or suspension of their ability to sell on Amazon," the AG's office wrote in the press release.
The suit follows a similar complaint from Washington, D.C., in May 2021. A court dismissed that claim in March 2022, although the district's attorney general is appealing the decision. Bonta sued under California's unfair competition law and another state statute that may give the state more leeway. The Federal Trade Commission, currently helmed by a longtime Amazon critic, is also investigating the company and is expected to a file a competition lawsuit, and European authorities are seeking a settlement that would assuage concerns about the company's competition against outside merchants on the platform.
"Sellers set their own prices for the products they offer in our store. 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. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law," an Amazon spokesperson wrote in a comment to Protocol.
Ben Brody contributed additional reporting. The story was updated at 4:57 p.m. to add comment from Amazon.