D.C. AG targets Amazon in new antitrust suit over third-party seller pricing policies

Incoming Amazon CEO Andy Jassy will be grappling with a growing number of antitrust challenges. (GeekWire File Photo / Todd Bishop)

A new lawsuit from the Washington, D.C., attorney general alleges that Amazon illegally manipulates the e-commerce market to its own advantage by penalizing third-party sellers that offer products at lower prices on other platforms.

Amazon quickly shot back, saying that Attorney General Karl Racine “has it exactly backwards,” and that his remedies “would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”

The suit, filed Tuesday morning, is part of a broader move by legislators and regulators to scrutinize and take action against Amazon’s business practices as a check on the company’s market power. Antitrust challenges are shaping up as one of the defining issues for incoming CEO Andy Jassy as founder Jeff Bezos shifts to a new role as executive chairman later this year.

Racine’s suit puts Amazon’s share of online sales at 50% to 70%, citing a U.S. House antitrust subcommittee report last year. Amazon has cited studies putting its market share below 40%, while arguing that the relevant market should be all retail sales, online and offline, of which it claims a much smaller slice.

At issue in the D.C. case are Amazon’s standard contracts and policies for companies that sell products on its marketplace. Amazon in 2019 removed a clause that prevented sellers from offering lower prices elsewhere as an explicit condition of selling on Amazon.

However, Racine’s office alleges in the suit that the replacement for that provision, known as the Marketplace Fair Pricing Policy, has a similar chilling effect.

The company says in that policy, “If we see pricing practices on a marketplace offer that harms customer trust, Amazon can remove the Buy Box, remove the offer, suspend the ship option, or, in serious or repeated cases, suspending or terminating selling privileges.”

The result is to “impose an artificially high price floor across the online retail marketplace and allow Amazon to build and maintain monopoly power,” Racine’s office said in a statement.

Amazon, in response, points out that sellers set their own prices. Here is the company’s statement in full.

“The DC 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.”

The suit, filed in Washington, D.C., Superior Court, is available here.

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