California sues Amazon for anti-competitive practices

California Attorney General Rob Bonta announced on September 14 that he had filed an antitrust lawsuit against Amazon in a San Francisco court. He believes the company has “strangled competition” and caused “prices to go up” through “anti-competitive contracting practices.”

Keep prices artificially high

Prosecutors are targeting the conditions Amazon has placed on sellers to force them to use their marketplace rather than offer their products to competitors like “Walmart, Target, eBay, or even their own websites.” “Amazon is forcing sellers into deals that artificially inflate prices, knowing full well they can’t afford to say no,” writes Rob Bonta. The platform thus became a “one-stop-shop for all purchases” to the detriment of “California consumers”, “small business owners” and “a fair and competitive economy”.

Specifically, Amazon requires sellers to “not offer lower prices elsewhere” and “take harsh penalties such as losing the Buy Box.” This shopping box makes it easy for Internet users to add items to their shopping cart. However, when multiple sellers offer the same item, only one seller can have this option.

Sellers risk being excluded

If merchants do not comply with the e-commerce giant’s prohibitions, they expose themselves to sanctions such as “reducing the list of products” or even “ending or suspending the ability to do so” through the marketplace. Consequently, “prices are artificially stabilized at higher levels.”

The complaint states that sellers feel they could sell their items cheaper on other sites because the additional fees are lower. In practice, they don’t because “Amazon will disqualify our offers” can be read.

Thus, Rob Bonta asks the courts to prohibit Amazon from entering into and applying anti-competitive terms in its contracts with sellers, as well as to oblige to compensate for the damage caused to consumers through damages.

Amazon in the sights of Brussels

The European Commission also accuses Amazon of anti-competitive practices. Two investigations are ongoing. The first concerns the use of private data from third-party marketplace sellers, which will allow it to “calibrate retail offerings” and “strategic business decisions” to the detriment of other sellers on the platform. The second concerns the “Buy Box” and the “Prime” label. This time around, it’s being criticized for applying unclear criteria to select sellers who benefit from these devices.

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