Anti-Competitive Practices | California is suing Amazon

(San Francisco) California’s Attorney General on Wednesday filed a lawsuit against Amazon, which he alleges abused its dominant position to curb competition and drive up prices, a lawsuit adding to the already numerous attempts by the Regulators are coming to curb the giant’s expansion.

Updated yesterday at 20:36.

Julie Jammot
Media Agency France

“Amazon is forcing retailers to agree to deals that keep prices artificially high, knowing they cannot afford to say no,” prosecutor Rob Bonta said in a statement.

“For years, California consumers have been paying more to shop online because of Amazon’s anti-competitive practices,” he said.

According to the prosecutor’s investigation, the e-commerce juggernaut “severely” punishes companies if their products are sold cheaper on other platforms.

The other marketplaces therefore have no chance of asserting themselves, explains the public prosecutor’s office, since Amazon, thanks in particular to its loyalty program Prime, dominates online consumption.

According to research conducted by Feedvisor and cited in the press release, 96% of Prime subscribers are more likely to buy products on the platform than anywhere else, and 74% of all American consumers go directly to Amazon when deciding to make a purchase online.

As a result, “more and more third-party retailers are adopting Amazon every day, even though their total cost of selling on this site is significantly higher than that of other online stores,” prosecutors assert.

“We have nowhere else to go and Amazon knows this very well,” said an anonymous seller quoted in the statement.

“Amazon is proud”

Many US states are investigating anticompetitive practices by tech giants and have filed lawsuits, including against Google and Meta (Facebook), for antitrust violations.

A previous lawsuit against Amazon, filed by the Washington Attorney General and similar to that of California, was dismissed by a judge in March.

“We hope that the California judiciary will come to the same conclusion as Washington’s and dismiss these lawsuits quickly,” responded the Seattle group contacted by AFP.

“Sellers set their own prices for the products they offer in our store,” the spokesman said. “Amazon prides itself on offering low prices on a very large selection. And like any store, we reserve the right not to make any offers that are not offered at competitive prices.”

He asserts that if Rob Bonta won his case, the platform would be “forced to display higher prices to customers, which, oddly enough, would go against the fundamental principles of competition law”.

Amazon emphasizes the positive impact it believes it is having on SMBs in every quarterly earnings release and press release.

Last July, “Amazon’s partners, which are mostly small and medium-sized businesses, had their best Prime Day,” the company said in an ad campaign. “Their retail growth (on the platform) has surpassed that of Amazon products.”

Californian “hypocrite”

It will be “extremely difficult to prove Amazon is raising prices,” said Neil Saunders, a director at GlobalData.

According to the analyst, the contracts criticized by the prosecutor’s office are not uncommon and do not prevent traders from lowering their prices as long as they do so elsewhere, which guarantees the site’s customers the best prices.

“It’s also a bit hypocritical of California to feign concern for consumers when the state has policies that keep many prices and taxes, for example on gasoline, very high,” he added.

The US Congress has been working alongside him for years to reform competition law.

A series of bills directly targeting Google, Apple and Amazon were approved by a parliamentary committee in June 2021, then not by the Senate Judiciary Committee last January.

The texts aim to limit the control of these companies over their sales platforms (application stores for Google and Apple), where they are both judges and parties.

This includes, for example, preventing them from favoring their own products, interfering with the pricing of retailers, or even using non-public data generated by sales from other sellers to their advantage.

But the final vote was postponed several times.

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