Amazon ‘penalizes’ sellers who offer lower prices elsewhere • The Register

California’s attorney general sued Amazon on Wednesday, alleging the internet titan illegally suppresses competition by penalizing vendors for selling their products at cheaper prices on other online stores.

Rob Bonta filed a lawsuit [PDF] on behalf of residents of the Golden State before a San Francisco Superior Court, accusing the e-commerce giant of violating California’s unfair competition law and the Cartwright Act. It is alleged that Amazon is urging sellers to sign agreements that threaten to punish them if they list their items at a lower price on other sites.

“Amazon forces retailers into agreements that keep prices artificially high, knowing full well that they can’t afford to say no,” says Cali AG said in an opinion.

“With other e-commerce platforms unable to compete on price, consumers are turning to Amazon as a one-stop shop for all their purchases. This maintains Amazon’s market dominance, allows the company to make increasingly untenable demands on its merchants and cost consumers more at the checkout in California.”

Merchants who break the rules face Amazon removing the “buy box” on the item page, which allows buyers to simply add the product to their Amazon cart, it said. Vendors’ product listings could be downgraded in search and their vendor accounts could even be terminated or suspended, it said. When a seller offers a product online for less than the Amazon price, the e-souk seeks compensation, the lawsuit.

Amazon is the largest US online retailer with more than 160 million people with Prime accounts in the country and has around 25 million customers in California. Many sellers rely on the e-commerce giant to reach more customers. But Amazon’s draconian rules are anti-competitive and will stifle smaller businesses and control costs for consumers, Bonta argued.

The strict rule also prevents larger companies such as Walmart, Target or eBay from competing fairly with Amazon. An e-commerce consultant reportedly said that other retailers often charge “much lower fees” than Amazon. These lower fees mean sellers can offer lower prices for items on other sites but are prevented from doing so if Amazon penalizes them.

“The policy and spirit of California’s antitrust laws is to encourage the free play of competitive market forces and the resulting lower prices for consumers,” the lawsuit states.

“Amazon, the dominant online retail business in the United States, has violated the principles, spirit and letter of these laws by enforcing retail and wholesale level agreements that allow for effective price competition in a variety of online marketplaces and -Have prevented business. “

Bonta argued that Amazon’s dominance and anti-competitive practices had hurt the California economy.

“The reality is: many of the products we buy online would be cheaper if market forces were left unchecked. With today’s lawsuit we defend ourselves. We will not allow Amazon to bend the market to its will at the expense of California consumers, small business owners and a fair and competitive economy,” Bonta said.

The registry has reached out to Amazon for comment. ®

https://www.theregister.com/2022/09/15/amazon_california_competition/ Amazon ‘penalizes’ sellers who offer lower prices elsewhere • The Register

Laura Coffey

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