California Files Antitrust Lawsuit against Amazon, Alleging Retailer Punishes Companies That Offer Lower Prices on Other Websites

Image: Amazon

California attorney general Rob Bonta has filed an antitrust lawsuit against Amazon, alleging that the retail giant stifles competition and increases the prices consumers pay across the internet with tactics that include removing important buttons (e.g., “Buy Now,” “Add to Cart”) from the product listings of companies that offer lower prices on other websites. The suit is limited to the Golden State but could have a broad impact across the country in the event that it’s successful.

“Without basic price competition, without different online sites trying to outdo each other with lower prices, prices artificially stabilize at levels higher than would be the case in a competitive market,” a portion of the complaint reads.

From a New York Times report (alternate link):

The lawsuit largely focuses on the way Amazon penalizes sellers for listing products at lower prices on other websites. If Amazon spots a product listed for cheaper on a competitor’s website, it often will remove important buttons like “Buy Now” and “Add to Cart” from a product listing page.

Those buttons are a major driver of sales for companies selling though Amazon, and losing them can quickly hurt their businesses.

That creates a dilemma for marketplace sellers. At times, they can offer products for lower prices on sites other than Amazon because the cost of using those sites can be lower. But because Amazon is by far the largest online retailer, the sellers would rather raise their prices on other sites than risk losing their sales on Amazon, the complaint said, citing interviews with sellers, competitors and industry consultants.

California has been investigating Amazon for more than two years, the Times noted. The antitrust lawsuit brought against Amazon in San Francisco Superior Court today says that the retailer’s practices violate California’s Unfair Competition Law and the Cartwright Act, with one effect being an “anticompetitive cycle,” in which sellers are forced to raise their prices to recoup costs.

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