California sues Amazon for ‘thwarting’ competition through seller contracts


California Attorney General Rob Bonta filed a lawsuit against Amazon on Wednesday, claiming the online retail giant inflated prices for consumers and stifled competition with other online retailers by forcing merchants into agreements that violate the state’s antitrust laws.
Close-up of sign with logo on facade of the regional headquarters of ecommerce company Amazon
Image source: Getty Images

The suit comes amid the company’s staggering growth, which skyrocketed during the pandemic, when brick-and-mortar retailers were forced to shutter. Amazon surged from a US$920 billion company into a US$1.49 trillion company in just the first few months of 2020. Nearly nine out of 10 shoppers in a recent Feedvisor survey said they are more likely to shop on Amazon than anywhere else, while 96% of Amazon Prime members said the same.

The suit against Amazon is the latest antitrust action against a tech giant. The Federal Trade Commission has sued Facebook parent Meta over its acquisitions of Instagram and WhatsApp and its planned purchase of a virtual reality company, a slate of mergers the FTC argues is anticompetitive. Google has also faced state and federal antitrust suits, and the Department of Justice is reportedly preparing an lawsuit against Apple, claiming its App Store policies stifle competition. On Wednesday, a European Union court upheld a US$4.13 billion fine against Google for violating antitrust laws by quashing competition on Android phones.

Previous attempts to combat alleged anticompetitive practices have had mixed results. In March, a federal judge dismissed a lawsuit filed in Washington D.C. that claimed Amazon’s pricing system harmed other online retailers, ruling there was not enough detail to substantiate the allegation, while another federal judge ruled a similar case in Washington could move forward as a class-action suit.

“For years, California customers have paid more for their online purchases because of Amazon’s anticompetitive contracting policies,” Bonta said in a statement Wednesday afternoon.

Further Reading

California Sues Amazon for Alleged Antitrust Violations That Inflated Prices, Stifled Competition (Wall Street Journal)

California sues Amazon, alleging antitrust law violation (Associated Press)

California launches suit against Amazon alleging anticompetitive contracts with retailers (LA Times)

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