California filed a lawsuit against Amazon on Wednesday, claiming that the company limits price competition through its practices.
California Attorney General Rob Bonta filed an antitrust suit against the company. The lawsuit only applies to California, but if it is successful, it could have a major effect on the rest of the country.
“If you think about Californians paying even just a little bit more for every product they purchased online over the course of a year, let alone a decade, which is what is at issue here, the collective magnitude of harm here is very far-reaching,” Bonta said during a press conference, The New York Times reported. “The everything store has effectively set a price floor, costing Californians more for just about everything.”
The lawsuit alleges that Amazon has acted against California antitrust laws in a way that harms consumers and limits competition.
“The policy and spirit of the California antitrust laws are to promote the free play of competitive market forces and the lower prices to consumers that result,” the lawsuit noted. “Amazon, the dominant online retail store in the United States, has violated the policy, spirit, and letter of those laws by imposing agreements at the retail and wholesale level that have prevented effective price competition across a wide swath of online marketplaces and stores.”
The suit centers on how Amazon places punishments on people selling on the site if they place their items on other websites at a lower cost, the Times noted. If the company sees an item on the website of a competitor for a lower price, many times it will take away buttons like “Buy Now” and “Add to Cart,” which significantly impact the sales of businesses using Amazon.
When sellers agree not to allow lower prices to be listed on other sites, this results in the prices for consumers actually being higher than they would naturally be if there were fair competition, the suit noted.
“Competing sites do not offer lower prices the way they would in a competitive market, not because Amazon competed successfully, not because Amazon is a more efficient retailer and marketplace, but because Amazon forbids it by contract,” the suit stated.
Earlier this year, a similar lawsuit from Washington, D.C. Attorney General Karl A. Racine was dismissed. A judge decided Racine didn’t prove that Amazon’s practices were anti-competitive.
Bonta said he believes his case will be successful as opposed to D.C.’s suit because they are offering much more information about how the company has harmed consumers. He said there was more research “than any other case has ever seen,” and also noted it will be successful because it is being brought under stricter California law. The state has been carrying out an investigation of Amazon for over two years.
The case is seeking damages from Amazon and said it “must also give up its ill-gotten gains and pay penalties,” as well as “cease its anticompetitive behavior.”