UPDATED 22:22 EDT / MAY 25 2021


Amazon stung with antitrust lawsuit filed by Washington DC attorney general

A lawsuit was filed today by Washington DC Attorney General Karl Racine that accuses the company of anticompetitive practices.

“Amazon’s online retail sales platform benefits from, and is protected by, Amazon’s anticompetitive business practices,” said the lawsuit. It claims that the company’s large market share of U.S. online sales leads to higher prices for the consumer.

One of the reasons why, the suit claims, is because of strict policies Amazon has regarding its third-party sellers. So-called “most favored nation” agreements mean that sellers can be asked to pay as much as 40% of the product price back to Amazon. They also have to agree that they won’t sell their products on another platform or on their own website at a lower price.

“As a result, these agreements impose an artificially high price floor across the online retail marketplace and allow Amazon to build and maintain monopoly power in violation of the District of Columbia’s Antitrust Act,” Racine’s office said in a press release.

It added that it not only keeps prices high and suppresses competition but also stifles innovation. A solution proposed is that Amazon scraps such agreements with sellers. The suit also asks that the company pay damages and that penalties should be imposed if something similar happens again. Violations and relief, however, will only apply to the District of Columbia.

An Amazon spokesperson shot right back, stating that the lawsuit has it “exactly backwards” and its third-part sellers have the choice to set their own prices. “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,” said the spokesperson, adding that the relief sought would only force Amazon to set higher prices.

Within the last few months, both Google LLC and Facebook Inc. have been hit with antitrust suits in the US, although it seems this is the first time Amazon has been targeted. In Europe, Amazon’s alleged monopoly power has been under scrutiny for some time.

During the pandemic and attendant lockdowns, people have been spending online more frequently. Amazon’s first-quarter results surpassed expectations, with the company reporting profits triple just a year before. That has also raised questions about the company’s alleged monopolistic behavior.

Photo: Wicked Monday/Unsplash

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