News

Amazon is accused of violating antitrust law; California Attorney General Rob Bonta has officially filed lawsuit against the giant

SAN FRANCISCO, California — Amazon is being accused of breaking antitrust rules in the state of California by the state of California, which has filed a lawsuit against the corporation for allegedly restricting competition and participating in methods that drive merchants to maintain higher prices on products sold on other websites.

The 84-page lawsuit that was filed Wednesday in San Francisco Superior Court is virtually identical to another complaint that was filed by the District of Columbia the previous year. That earlier complaint was dismissed by a district judge earlier this year, and it is currently going through the appeals process.

But the authorities in California are confident that they will not face the same problem. This optimism is based in part on the findings of an investigation that lasted for more than two years and included the issuance of subpoenas and the conduct of interviews with sellers, Amazon’s competitors, and both current and former employees of the company.

In the lawsuit, the office of California Attorney General Rob Bonta alleged that Amazon used contract provisions to effectively bar sellers from offering lower prices for products on non-Amazon sites, including on the sellers’ own websites. This was done by preventing sellers from listing their products on Amazon at a price lower than Amazon’s. That, in turn, makes it harder for other retailers to compete with one another.

According to the allegations made in the lawsuit, merchants who do not comply with the policy risk having their products removed from prominent listings on Amazon as well as facing other consequences such as suspensions or terminations of their accounts. It is claimed that Amazon’s approach effectively compels merchants to publish higher pricing on rival websites, which enables the retail giant to continue to maintain its leadership position in the e-commerce sector.

The case filed in California aims, among other things, to prevent Amazon from entering into contracts with vendors that would have an adverse effect on pricing competition. Additionally, it asks the court to issue an order compelling Amazon to compensate the state for the increased costs caused by the higher prices. The officials from the state did not disclose the amount of money that they are looking for.

According to the research firm Insider Intelligence, Amazon, headquartered in Seattle, controls approximately 38% of online sales in the United States. This percentage is greater than the combined sales of Walmart, eBay, Apple, Best Buy, and Target. Amazon’s third-party marketplace has around 2 million sellers who list their products there. These sellers are responsible for 58% of the company’s retail sales.

“Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that they can’t afford to say no,” said Bonta in a statement. “Amazon knows full well that they can’t afford to say no.”

In the past, Amazon has stated that vendors are free to determine their own rates on the marketplace. It has also stated that it reserves the right to refrain from highlighting products that do not have prices that are comparable to those of similarly priced products.

In spite of this stance, lawmakers and advocacy groups that favor more stringent antitrust legislation have focused their attention on Amazon’s dominant market position as a subject of investigation. At the beginning of this year, members of Congress made a request to the Department of Justice, asking it to determine whether or whether the corporation collects data on sellers in order to develop rival products and present them more prominently on its website. Increases in the fees that are placed on vendors have also come under fire from critics since they make it more difficult for new businesses to enter the market.

On Capitol Hill, lawmakers from both parties have been working to advance legislation that would restrict the ability of Amazon and other large technology companies, like as Apple, Google, and Meta, to give preference to their own goods and services over those of competitors. The law has been approved by the relevant committees, but it has been stuck in Congress for months due to the vigorous opposition from the businesses.

In the meantime, authorities have also been investigating the commercial dealings and activities of Amazon. The company made several concessions in July in order to settle two antitrust investigations that were being conducted in the European Union. One of these was a promise to apply equal treatment to all sellers when ranking product offers on the website’s “buy box,” a coveted spot that makes items more visible to shoppers.

The Federal Trade Commission in the United States is looking into the practices of Amazon Prime, the company’s paid subscription service that offers deals and faster shipping, as well as the $3.9 billion acquisition of the primary health organization One Medical by Amazon. Additionally, the FTC is looking into the sign-up and cancellation practices of Amazon Prime.

Related Articles

Back to top button