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D.C. Attorney General Sues Amazon for Alleged Price Hikes and Power Monopoly over Small Businesses

todayMay 27, 2021

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Washington, D.C. Attorney General Karl Racine claims Amazon “unfairly” raised prices and “suppressed innovation.”

What We Know:

  • The D.C. Superior Court lawsuit accuses the company of illegally maintaining monopoly power by using contract provisions that block third-party sellers from selling their products on other platforms at a lower price. Racine’s office believes the contracts create “an artificially high price floor across the online retail marketplace.” An official press release from Racine also states these agreements harm consumers and retailers because it reduces competition, innovation, and choice.
  • Although Amazon removed the “price parity provision” clause from its business solutions agreement, its new “fair pricing policy” allows the website to “impose sanctions” on a vendor that sells their product on another marketplace for a more affordable price.
  • Racine wants the business to end its illegal use of price agreements against the competition. In addition, the lawsuit demands the court assign damages and penalties to make sure similar conduct does not occur. Some of the suggestions to block Amazon’s power include a corporate monitor and structural relief.
  • Additionally, Racine announced Amazon holds between 50-70% of the online market share of the digital retail sales market while rivals Walmart and eBay only possess around 5% each.
  • This is not the first time the e-store faces antitrust scrutiny. Last fall, a portion of the House Judiciary Antitrust Subcommittee’s 400-page document concluded that the online superstore takes advantage of its reputation in e-commerce by requiring third-party sellers to adhere to “most favored nation” clauses.

Amazon responded to the lawsuit on Thursday through a statement. The enterprise denies Racine’s allegations and affirms that sellers can set their own prices. A spokesperson also said that Amazon “reserves the right” to not showcase any uncompetitive prices and offers to consumers. Furthermore, “The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”

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