State AG Rob Bonta claims he has the proof that Amazon forces other websites to maintain artificially high prices, and that’s how Amazon maintains the lowest prices, and that he’s going to blow the lid off this with a new lawsuit against the online retail giant.
Online retailer Amazon seems to be the cheapest place to buy anything online. And we all just kind of figure they do this through some great entrepreneurial advantage; be it scale, or because of their enormous third-party seller base, or some other clever online retail hack by which they’ve outmaneuvered the competition.
But California Attorney General Rob Bonta says it’s nothing of the sort. Bonta now claims that Amazon’s lower prices are because they literally force other websites and wholesalers to charge higher prices, to create the illusion of Amazon having lower prices. And he’s brought an antitrust lawsuit against Amazon, according to Fresno’s KFSN, claiming he has information from a two-year study that proves Amazon forces other sites to charge higher prices than Amazon.
“Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price,” Bonta says in the lawsuit filed Wednesday in a state Superior Court. “The intent and effect of these agreements is to insulate Amazon from price competition, entrenching Amazon’s dominance, preventing effective competition, and harming consumers and the California economy.”
At a Wednesday press conference in San Francisco, Bonta added that “Consumers are paying the price,” and that “Consumers are getting hurt,” according to the Chronicle.
Bonta says he has proof that Amazon forces third-party sellers into contracts that bar them from offering lower prices on sites that aren’t Amazon. He adds that if they do so, Amazon lowers that seller's rankings in search results, or suspends or bans their accounts altogether.
The lawsuit does not have a dollar amount attached to it, but it does seek monetary compensation damages from Amazon. Additionally, according to the Chronicle, “Bonta’s office also wants Amazon to notify third party sellers on its site that they can offer lower prices elsewhere, and to have a court-appointed monitor keep tabs on the company to ensure it does not continue the allegedly anti-competitive practices in the future.”
Related: Supervisors Slap a Moratorium on Parcel Delivery Sites, In an Obvious Shot at Amazon [SFist]
Image: Adrian Sulyok via Unsplash