DC Attorney General Files Antitrust Suit Against Amazon
Karl Racine says the e-commerce leader illegally controls online prices.
Karl Racine, attorney general for the District of Columbia, has sued Amazon on antitrust grounds, alleging that the e-commerce corporation manipulates online prices to eliminate competition.
Racine asserts that Amazon’s tactics have led to price hikes that are unfair for consumers and that thwart innovation.
Filed in Washington, D.C. Superior Court, the lawsuit asserts that Amazon has used contract terms to prohibit third-party sellers on its online marketplace from selling their products for lower prices on other platforms, thereby leveraging a monopoly power.
The practice manipulates pricing in the online commerce arena, making prices higher than they would be if fair market conditions were able to prevail, according to the attorney general’s office. At the end of the day, Amazon’s imposed agreement on third-party sellers hurts consumers and the sellers themselves by stifling choice, innovation and competition, Racine maintains.
Following some scrutiny, Amazon in 2019 removed a clause in its business solutions agreement, which third-party sellers must agree to in order to sell on the platform, that barred sellers from offering their wares on competitors’ web marketplaces for lower prices than what they sell for on Amazon.
Still, Racine says Amazon just replaced that clause with another that has essentially the same effect. Referred to as the “fair pricing policy,” the clause empowers Amazon to “impose sanctions” on sellers that retail their products at a lower price elsewhere online.
Racine’s aim with the lawsuit is to get Amazon to stop enacting what he describes as its illegal price manipulation practices. He’s also seeking damages and penalties.
Beyond being an e-commerce marketplace, Seattle-headquartered Amazon functions as a multinational technology whose business activities touch everything from cloud computing and artificial intelligence, to entertainment. In the first quarter of 2021, Amazon increased revenue by 44% year over year to $108.5 billion.
Over roughly the last decade, Amazon has grown into a source of concern and opportunity for the $20.7 billion North American promotional products industry. Certain promo companies actively sell on the platform, generating what some have described as good returns. Still, developments that include Merch by Amazon, a service that enables users to online-order custom-fit T-shirts with personalized labels, and an on-demand apparel manufacturing system have caused some branded merchandise pros to view Amazon as a major competitive threat to the promotional products industry.