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California suing Amazon for blocking price competition

Amazon Prime
Posted at 11:25 AM, Sep 15, 2022

California filed a lawsuit against Amazon on Wednesday, alleging the e-commerce giant violated the state's antitrust and unfair competition laws by increasing prices across the state and “stifled competition.”

In a news release, Attorney General Rob Bonta said Amazon requires third-party sellers to enter contracts that prohibit them from selling their products for a lower price on competitor's websites, like Walmart, Target, or eBay.

Bonta said this practice has allowed Amazon to dominate the online marketplace by not allowing other retailers to compete.

“For years, California consumers have paid more for their online purchases because of Amazon's anticompetitive contracting practices,” said Bonta in the news release. “Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that 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."

According to the lawsuit, if the seller does offer their products elsewhere for a lower price, Amazon allegedly penalizes the merchant by possibly terminating or suspending them from selling on Amazon.

"The reality is: Many of the products we buy online would be cheaper if market forces were left unconstrained," Bonta said in a statement. "With today's lawsuit, we're fighting back. We won't allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy.”

In the lawsuit, California seeks to stop the e-commerce company from entering contracts with sellers that harm price competition.