Washington, DC, Attorney General Karl Racine announced Tuesday, May 25, that he’s suing Amazon on antitrust grounds, alleging the company’s practices have unfairly raised prices for consumers and suppressed innovation, reported CNBC.
Racine is seeking to end what he alleges is Amazon’s illegal use of price agreements to edge out competition; the lawsuit also asks for damages and penalties to deter similar conduct. The suit asks the court to stop what it calls Amazon’s ability to harm competition through a variety of remedies as needed, which could include structural relief, often referred to as a form of breakup.
The lawsuit, filed in DC Superior Court, alleges Amazon illegally maintained monopoly power by using contract provisions to prevent third-party sellers on its platform from offering their products for lower prices on other platforms. The attorney general’s office claimed the contracts create “an artificially high price floor across the online retail marketplace,” according to a press release. The AG claimed these agreements ultimately harm both consumers and third-party sellers by reducing competition, innovation and choice.
Amazon requires third-party sellers who want to do business on the online marketplace to abide by its business solutions agreement. Until 2019, Amazon included a clause in that document, referred to as a “price parity provision,” which prohibited sellers from offering their products on a competitor’s online marketplace at a lower price than what their products sold for on Amazon.
Amazon quietly removed that provision in March 2019 amid growing antitrust scrutiny.
According to the complaint, even after Amazon removed the pricing parity provision from its agreement with third-party sellers, it added a nearly identical clause, referred to as its “fair pricing policy.” The fair pricing policy enables Amazon to “impose sanctions” on a seller that offers their product for a lower price on a competing online marketplace.
In an interview Tuesday on CNBC’s “The Exchange,” Racine said Amazon pulled a “bait and switch” with the pricing clauses in response to pressure from Congress.
