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Amazon (AMZN) faces expanded antitrust claims in a modified lawsuit originally filed against the e-commerce giant in May by the District of Columbia attorney general.
The original lawsuit, filed in May, accused Amazon of unlawfully abusing its monopoly power and violating District of Columbia antitrust law by prohibiting third-party sellers from offering cheaper prices for their products on competing websites.
In the amended lawsuit, Washington, DC Attorney General Karl Racine adds that Amazon had anti-competitive agreements with wholesalers, also known as “first sellers,” who sell products to Amazon for the company to sell. resells them to its consumers at retail.
“Amazon uses a different anti-competitive agreement with its owner sellers to insulate it from competition from other online marketplaces,” the amended complaint states. “In their sales agreements, the owner sellers and Amazon agree that the owner seller guarantees Amazon a certain minimum profit when Amazon sells the products it has purchased from the owner seller in the Amazon online marketplace.”
In contracts, called minimum margin agreements, the attorney general alleges that owner sellers must accept a minimum profit for Amazon. In the event that Amazon sells the product for less than that profit, the agreement stipulates that the owner sellers must pay Amazon the difference in an arrangement called a “match,” according to the amended complaint.
As a result, Racine concludes, there is an incentive for sellers to charge more for their products in non-Amazon marketplaces to ensure Amazon doesn’t lower its price due to lower prices elsewhere.
“These deals reduce the ability of other online marketplaces to compete with Amazon by offering lower prices to consumers,” Racine said in a statement.
“We offer low prices on a wide selection”
In the first complaint, the AG targeted Amazon’s rules to allegedly increase the price of retail items across the entire online marketplace, ultimately harming both regular consumers and third-party sellers.
Amazon’s third-party seller agreement, until at least 2019, according to the complaint, included a clause explicitly prohibiting sellers from offering products on competing sites.
The allegations went on to say that Amazon “has removed competition from other online retail platforms, such as eBay, Walmart and even TPS” own websites.”
The AG asked the court to prevent Amazon from pursuing its alleged anti-competitive behavior, including through compulsory divestitures, if necessary, and by appointing a corporate monitor to ensure compliance with any remedies imposed by the court. The AG also seeks pecuniary damages but did not specify the amount, and that the court withdraws from Amazon any gain obtained illegally.
Yahoo Finance has reached out to Amazon for comment on the extended antitrust allegations and will update this story if it receives a response. In a previous statement, in response to the first complaint, an Amazon spokesperson told Yahoo Finance that DC AG had the situation upside down.
“Sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices on the widest selection, and like any store, we reserve the right not to put in before offers to customers that are not competitively priced, “said the spokesperson.
“The relief sought by the GA would force Amazon to charge higher prices to customers, strangely defeating the fundamental objectives of antitrust law.”
Amazon has come under scrutiny by a long list of agencies, including the House Judiciary Committee, Federal Trade Commission, and Department of Justice, as well as state attorneys general in California, New York, and from Washington.
Alexis Keenan is a legal reporter for Yahoo Finance and a former litigation lawyer. Follow Alexis Keenan on Twitter @alexiskweed.
Do you have any advice? Email Daniel Howley at [email protected] via encrypted mail to [email protected], and follow him on Twitter at @DanielHowley.
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