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California Alleges Stifled Price Competition in Lawsuit

Published: September 14, 2022
This picture taken on July 4, 2022 shows the logo of Amazon displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. California has filed a lawsuit against Amazon alleging the company violated antitrust law by blocking price competition and pushing up prices for consumers. (Image: KAZUHIRO NOGI/AFP via Getty Images)

California filed a lawsuit against on Wednesday, alleging that the company violated antitrust law by blocking price competition and pushing up prices for consumers.

California Attorney General Rob Bonta said Amazon’s rules bar merchants from selling products at lower prices on their own websites or at the stores of Amazon’s rivals.

“Through its actions, the everything store has effectively set a price floor, costing Californians more for pretty much everything,” Bonta said.

The lawsuit was filed in San Francisco Superior Court.

Amazon, which did not immediately respond to a request for comment, has previously denied anticompetitive behavior.

The company is the world’s largest online retailer and grew even bigger during the pandemic as people avoided in-person shopping. It has come to be relied on by customers for batteries, diapers, groceries and countless other products. Over 200 million users are Prime members, paying for faster shipping and other benefits.

“Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that they can’t afford to say no. With other e-commerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases,” Bonta said. “This perpetuates Amazon’s market dominance.”

In its lawsuit, Bonta’s office asked the court to prohibit Amazon from enforcing Amazon contracts that bar the sale of goods more cheaply elsewhere and to pay damages and penalties.

Washington, D.C., filed a similar lawsuit against Amazon in May 2021. Amazon won dismissal of it earlier this year.

Amazon offered to make changes to stave off California’s lawsuit, Bonta said, but he deemed them unsatisfactory. The lawsuit contains numerous references to internal memos and other documents from Amazon, but many of the details are redacted. Bonta described the material as “telling, revealing information that led us to bring this lawsuit.”

By Reuters (Reporting by Paresh Dave in San Francisco and Diane Bartz in Washington; Editing by Mark Porter and Lisa Shumaker)