Washington, D.C., filed a lawsuit against Amazon Tuesday alleging the massive online retailer regularly engages in illegal, anticompetitive price control practices.
Amazon prevents third-party sellers who use its online marketplace from selling their products at a lower price on other platforms, Democratic Washington D.C. Attorney General Karl Racine alleged in the lawsuit. Sellers must also pay high fees — equal to 40% of the total product price in many cases — to Amazon, the lawsuit said.
The high fees are passed onto consumers who purchase products both on Amazon and on other platforms since sellers are forced to offer lowest prices on Amazon’s marketplace, according to the lawsuit. When a seller increases prices on Amazon due to high fees, it must then raise prices everywhere else the product is sold. (RELATED: European Union Hits Amazon With Antitrust Charges, Alleges Company Uses Data To Gain Unfair Advantage)
“Amazon has used its dominant position in the online retail market to win at all costs,” Racine said in a statement Tuesday. “It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favor.”
Amazon CEO Jeff Bezos testifies during a House hearing on July 29. (Graeme Jennings/Pool/Getty Images)
“We filed this antitrust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market,” Racine continued. “We need a fair online marketplace that expands options available to District residents and promotes competition, innovation, and choice.”
Racine stated that Amazon’s contracts with sellers impose an “artificially high price floor” for consumers across the board. Amazon’s business practices ultimately deprive consumers of choice and stifle competition online, according to Racine.
The lawsuit alleged that Amazon maintains monopoly power in violation of Washington D.C.’s Antitrust Act.
“The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store,” an Amazon spokesperson told the Daily Caller News Foundation in a statement. “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,” the statement continued.
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