California Attorney General Rob Bonta announced a lawsuit against Amazon in violation of California’s Unfair Competition Law and Cartwright Act. In order to avoid competing on prices with other online e-commerce sites, the e-commerce giant requires merchants to enter into agreements that severely penalise them if their products are offered at a lower price on other online stores, according to the announcement.
In the lawsuit, Attorney General Bonta alleges that these agreements thwart the ability of other online retailers to compete, contributing to Amazon’s dominance in the online retail marketplace and harming merchants and consumers through inflated fees and higher prices.
“Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that they can’t afford to say no. With other e-commerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases. This perpetuates Amazon’s market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California.” said Attorney General Bonta.
“The reality is: Many of the products we buy online would be cheaper if market forces were left unconstrained. With today’s lawsuit, we’re fighting back. We won’t allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy.” he added.
Without basic price competition and different online sites trying to outdo each other with lower and lower prices, prices artificially stabilise at levels higher than would be the case in a competitive market. This occurs not because Amazon competed successfully or because it is a more efficient retailer and marketplace, but because Amazon forbids it through coerced agreements, the announcement explains.
The Attorney General’s lawsuit seeks an order from the San Francisco Superior Court that stops the e-commerce company’s anticompetitive behaviour and recovers the damages to California consumers and the California economy.
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