California suit says ‘Amazon keeps prices artificially high’

Bloomberg

California sued Amazon.com Inc, saying the company forces third-party merchants to agree to policies that lead to “artificially high prices” for consumers.
State Attorney General Rob Bonta announced the antitrust suit challenging Amazon merchant agreements that bar sellers from offering lower prices on other sites and impose stiff penalties if they do. He said the agreements block competition from other online retailers, resulting in inflated fees for merchants and higher prices for consumers.
“Amazon coerces merchants into agreements that keep prices artificially high, knowing full-well that they can’t afford to say no,” Bonta said in a statement. The suit, filed in state court in San Francisco, seeks an order blocking Amazon from continuing to engage in anticompetitive behaviour and compensation for California consumers.
The suit comes three years after Bloomberg reported that the company’s pricing policies were forcing sellers to raise their prices on competing sites like Walmart Inc because if they offered lower prices on other sites Amazon would bury their products in search results.
Bonta’s suit similarly stressed that merchants risked less prominent placement on Amazon or even removal from the site if they charged less on rivals like Walmart, Target, eBay, and, in some instances, their own websites.
It’s not the first time that Amazon’s policy towards merchants has drawn scrutiny. The California suit is similar to one filed last year by Washington, Attorney General Karl Racine. A judge dismissed the suit last year, but Racine is trying to revive the case on appeal. The Justice Department submitted a brief in support of Racine’s appeal, saying the judge who dismissed it misapplied antitrust law.
“Similar to the DC attorney general — whose complaint was dismissed by the courts — the California attorney general has it exactly backwards,” Amazon representative Alex Haurek said in a statement. “Sellers set their own prices for the products they offer in our store.” Haurek said the relief Bonta was seeking “would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
In response to an antitrust price-fixing investigation by the Washington state attorney general, the company agreed to pay a $2.25 million fine in January and shutter a program in which it agreed on pricing with third-party sellers, rather than compete with them.
Bonta highlighted Amazon’s market dominance in the California suit, calling the 160 million members of its Prime subscription service “the most lucrative customers online.”