California is suing Amazon, accusing the company of violating the state’s antitrust and unfair competition laws. The state says Amazon has stifled competition and engaged in practices that push sellers to maintain higher prices on products on other sites. In an 84-page lawsuit filed Wednesday in San Francisco Superior Court, the California Attorney General’s office says Seattle-based Amazon had effectively barred sellers from offering lower prices for products elsewhere through contract provisions that harm the ability of other retailers to compete. The lawsuit mirrors another complaint filed last year by the District of Columbia, which was dismissed by a district judge earlier this year. That decision is being appealed.
The suit maintains merchants that do not comply with the policy could have their products stripped from prominent listings on Amazon and face other sanctions such as suspensions or terminations of their accounts. It alleges Amazon’s policy essentially forces merchants to list higher prices on other sites, helping it maintain its e-commerce dominance.
“The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law,” the company said. “We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly.” He said the lawsuit is also a message to other companies who “illegally bend the market at the expense of California consumers, small business owners and the economy."
Despite that defense, Amazon’s market power has been a subject of scrutiny from lawmakers and advocacy groups calling for stricter antitrust regulations. Earlier this year, congressional lawmakers urged the Justice Department to investigate if the company collects data on sellers to develop competing products and offer them more prominently on its site. Critics have also lambasted the increasing fees imposed on sellers, which makes it more difficult for merchants to enter the market.
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