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California state attorney files lawsuit against Amazon

 2 years ago
source link: https://finance.yahoo.com/news/california-lawsuit-amazon-221115095.html
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California issues antitrust lawsuit against Amazon, tech stocks search for direction
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California state attorney files lawsuit against Amazon

Thu, September 15, 2022, 7:11 AM·5 min read

California’s attorney general filed a lawsuit against Amazon (AMZN) Wednesday, alleging that the retail giant is violating the state’s antitrust and unfair business practices laws by illegally using its dominance to stomp out competition in the online retail market.

In an 84-page civil complaint, the state’s top law enforcement official says Amazon is insulating itself from price competition by forcing third-party sellers and wholesale suppliers that sell and deliver new products to a buyer’s home to refrain from offering lower prices elsewhere. These pricing agreements require the parties to agree they’ll prevent Amazon’s competitors — such as Walmart (WMT), Target (TGT), eBay (EBAY), and the party's own websites — from offering lower prices.

The contracts prevent effective price competition across a “wide swath” of online marketplaces and stores, the complaint states.

“Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anti-competitive agreements on price,” the complaint states.

California Attorney General Rob Bonta, at lectern and flanked by staff, announces an antitrust lawsuit against Amazon.com Inc during a news conference in San Francisco, California, U.S. September 14, 2022. REUTERS/Paresh Dave
California Attorney General Rob Bonta, at lectern and flanked by staff, announces an antitrust lawsuit against Amazon.com Inc during a news conference in San Francisco, California, U.S. September 14, 2022. REUTERS/Paresh Dave

Amazon — along with other tech giants like Meta Platforms (META) — has been increasingly subject to antitrust scrutiny. This also isn't the first state-level antitrust lawsuit that's been brought against Amazon, particularly when it comes to how the company manages pricing and its seller relationships. In March, the Superior Court of the District of Columbia dismissed a similar antitrust lawsuit that D.C. Attorney General Karl Racine's brought against Amazon.

In a complaint filed May 2021, Racine argued that the company’s “Fair Pricing Policy” violated the district’s Antitrust Act by prohibiting third-party sellers from offering lower prices for their products on competing websites. The suit also alleged that Amazon imposed anti-competitive agreements on wholesalers known as “first-party sellers” that sell products to Amazon, which in turn resells to its retail consumers.


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