California sues Amazon for preventing third-party sellers offering cheaper prices elsewhere

The state's antitrust lawsuit could force Amazon to change its policies.

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An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. - Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
PATRICK T. FALLON/AFP via Getty Images

Amazon still can't avoid lawsuits over third-party prices. The New York Times reports California has filed an antitrust lawsuit accusing Amazon of violating both the Cartwright Act and state competition law through its pricing rules. The internet giant is stifling competition by preventing sellers from offering lower prices on other sites, according to Attorney General Rob Bonta. If they defy Amazon, they risk losing buy buttons, prominent listings or even basic access to Amazon's marketplace.

If successful, the lawsuit would bar any contracts deemed anti-competitive and notify sellers that they're free to reduce prices elsewhere. Amazon would also have to pay damages, return "ill-gotten gains" and appoint a court-approved overseer.

In a statement, an Amazon spokesperson said California had the situation "exactly backwards." Third-parties still have control over prices, Amazon claimed, and inclusion in the "Buy Box" space supposedly shows that a deal is truly competitive. It further contended that the suit would raise prices. You can read the full statement below.

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The case is similar to a District of Columbia lawsuit. The region's Superior Court dismissed that case in March citing a lack of evidence, but Attorney General Karl Racine is appealing the decision.

Amazon is facing increasing government scrutiny of its practices. The Federal Trade Commission has been investigating issues ranging from major acquisitions through to withheld driver tips, while EU pressure prompted Amazon to revise its seller program and improve third parties' chances of competing with direct sales. The tech firm has balked at these moves, and went so far as to both demand the FTC chair's recusal as well as fight agency requests to interview executives. Don't expect either side to back down any time soon, in other words.

"Similar to the D.C. Attorney General—whose complaint was dismissed by the courts—the California 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. We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly."

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California sues Amazon for preventing third-party sellers offering cheaper prices elsewhere