This morning, the Office of the Attorney General of the District of Columbia (OAG) filed an antitrust lawsuit alleging Amazon engages in anti-competitive practices by requiring third-party merchants to sell items on its marketplace at the same price as on other marketplaces or their own websites.
The AOG alleges the company fixes online prices through contract provisions and policies known as “most favored nation” (MFN) agreements imposed on third-party sellers, resulting in higher prices for consumers.
“Amazon has used its dominant position in the online retail market to win at all costs. It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favor. We filed this antitrust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market. We need a fair online marketplace that expands options available to District residents and promotes competition, innovation, and choice.”District of Columbia Attorney General Karl A. Racine
The lawsuit alleges that the pricing agreements Amazon imposes on third-party sellers are facially anti-competitive and allow the company to illegally build and maintain monopoly power in online commerce violating the District of Columbia’s Antitrust Act.
Antitrust Lawsuit Allegations
Raises prices for consumers: “Amazon’s MFNs harm consumers by artificially inflating prices they pay for products purchased across the online retail market. When third-party sellers sell on Amazon, they must pass on the cost of Amazon’s high fees and commissions to consumers. While third-party sellers can sell their products for lower prices on other platforms and on their own websites, where fees are lower or non-existent, Amazon’s MFNs prevent sellers from passing on these savings to consumers. These agreements create an artificially high price “floor” across the entire online market and prevent other platforms from enticing consumers away from Amazon with lower prices and gaining market share. Without these restraints, products would be available to consumers at lower prices.”
Stifles competition in the online retail market: “Amazon maintains its dominance in online retail by preventing other platforms from competing on price to win market share. The most important factor in online shoppers’ purchasing decisions is price. By ensuring that third-party sellers cannot offer lower prices elsewhere online, Amazon insulates itself from meaningful competition.”
Deprives consumers of choice: “Amazon’s anti-competitive actions have resulted in less choice for consumers in the online retail market, suppressed innovation, and reduced investment in potentially competing platforms.”
Amazon Denies Antitrust Allegations
An Amazon spokesperson responded to the lawsuit denying the DC AOG allegations, “The DC Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store. 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. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
This is just the latest antitrust lawsuit or investigation Amazon is entangled in. Just last year, the EU launched an antitrust investigation in its handling of sales data, alleging Amazon was using the data to compete with its third-party merchants.
With this lawsuit by the DC OAG, the OAG seeks to end Amazon’s alleged illegal price agreements to foreclose competition and maintain its monopoly in online retail sales. Additionally, the DC AOG seeks to recover damages and impose penalties to deter similar conduct by Amazon and other companies.
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