California Sues Amazon for ‘Taking Vengeance’ on Small Businesses

September 14, 2022 by Madeline Hughes
California Sues Amazon for ‘Taking Vengeance’ on Small Businesses
Amazon fulfillment employee wearing PPE (Amazon photo)

SACRAMENTO, Calif. — The state of California is suing Amazon alleging antitrust violations of how the “dominant online retail store in the United States” takes vengeance on small businesses who attempt to put their products on other websites for cheaper prices, according to the lawsuit.

“For years, California consumers have paid more for their online purchases because of Amazon’s anticompetitive contracting practices,” said State Attorney General Rob Bonta in a statement Wednesday. “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.”

The lawsuit describes how third-party agreements bar smaller companies that use the website as a storefront from selling goods elsewhere for cheaper; otherwise, sellers face penalties, according to the lawsuit.

“Similar to the D.C. attorney general — whose complaint was dismissed by the courts — the California attorney general has it exactly backwards. Sellers set their own prices for the products they offer in our store,” according to a statement from an Amazon spokesperson.

The company was referring to a lawsuit dismissed in early August by District of Columbia Superior Court Judge Hiram E. Puig-Lugo because the district did not bring enough evidence to prove its case, and that Amazon simply used a smart business strategy.

Amazon’s prominence as a selling platform grew by 45% in 2020, adding 200,000 new sellers from across the world, according to the company’s information page. In the U.S. there are nearly 30,000 “storefronts” using the platform, the company states.

The California lawsuit alleges Amazon penalizes “storefronts” selling their products elsewhere online by removing certain buttons that make items easier to buy or place in a cart. The company also moves items to the bottom of “organic search results” — the list of items that appears after a search without the seller paying for special advertising.

“This perpetuates Amazon’s market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California,” Bonta said. “The reality is: Many of the products we buy online would be cheaper if market forces were left unconstrained. With today’s lawsuit, we’re fighting back. We won’t allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy.”

Smaller wholesale retailers on the site also sign agreements that undermine their ability to offer discounts, the lawsuit alleges.

“Amazon’s wholesale suppliers agree to be punished if they discount or fail to prevent discounting by Amazon’s rivals, thereby powerfully disincentivizing that discounting,” according to the lawsuit.

And according to the lawsuit, the company knows it is potentially breaking antitrust rules.

“Amazon’s own internal documents demonstrate that it is aware that … [the company] forbids such pricing competition by contract,” the lawsuit states. 

The California lawsuit also includes sellers’ stories about how they essentially feel locked into paying for advertisements on the site.

According to one seller, “Over time it became clear that if we did not purchase advertisements, we would not show up in search results,” the lawsuit states.

The company maintains it is trying to offer low prices.

“Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively,” according to the company spokesperson. “The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law. We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly.”

Madeline can be reached at [email protected] and @MadelineHughes

A+
a-
  • Amazon
  • California
  • In The News

    Health

    Voting

    In The States

    December 4, 2023
    by Dan McCue
    Oil and Gas Lease Sale in Oklahoma and New Mexico Nets More Than $22M

    SANTA FE, N.M. — The Bureau of Land Management announced a competitive oil and gas lease sale offering nine parcels... Read More

    SANTA FE, N.M. — The Bureau of Land Management announced a competitive oil and gas lease sale offering nine parcels in Oklahoma and New Mexico brought in $22,530,735. The sale, conducted on Nov. 30, covered a total of 553.59 acres. The environmental assessment, maps, parcel lists,... Read More

    December 4, 2023
    by Dan McCue
    Former Ohio Utilities Chairman Indicted in Bribery Scandal

    CINCINNATI — A federal grand jury has charged the former chairman of the Public Utilities Commission of Ohio with taking... Read More

    CINCINNATI — A federal grand jury has charged the former chairman of the Public Utilities Commission of Ohio with taking $4.3 million in bribes from one of the nation's largest investor-owned utility companies. Sam Randazzo surrendered at the federal court in Cincinnati on Monday after being... Read More

    December 1, 2023
    by Tom Ramstack
    Inspector General Investigates Reports of Bias in New FBI Headquarters Choice

    WASHINGTON — A federal inspector general’s investigation is checking out reports that conflicts of interest might have influenced the choice... Read More

    WASHINGTON — A federal inspector general’s investigation is checking out reports that conflicts of interest might have influenced the choice last month of Greenbelt, Maryland, for the new FBI headquarters. Until the General Services Administration announced the 61-acre Greenbelt site on Nov. 8, a second site... Read More

    November 30, 2023
    by Dan McCue
    New York Appellate Court Reinstates Trump Gag Orders

    NEW YORK — A New York appeals court panel on Thursday reinstated a pair of gag orders issued in Donald... Read More

    NEW YORK — A New York appeals court panel on Thursday reinstated a pair of gag orders issued in Donald Trump’s civil fraud trial that barred the former president from speaking publicly about the judge’s court staff. The two-page decision by the New York State Supreme... Read More

    November 28, 2023
    by Dan McCue
    Maryland Expands Access to Contraceptive Care

    ANNAPOLIS, Md. — The state of Maryland has entered into a four-year partnership with a Boston, Massachusetts-based nonprofit to eliminate... Read More

    ANNAPOLIS, Md. — The state of Maryland has entered into a four-year partnership with a Boston, Massachusetts-based nonprofit to eliminate barriers to contraceptive care. In an announcement on Tuesday, Gov. Wes Moore said the cooperative agreements between the Maryland Department of Health and Upstream USA will... Read More

    Mayo Clinic Announces $5B Expansion of Minnesota Campus

    MINNEAPOLIS (AP) — The Mayo Clinic announced a $5 billion expansion plan for its flagship campus Tuesday that includes new... Read More

    MINNEAPOLIS (AP) — The Mayo Clinic announced a $5 billion expansion plan for its flagship campus Tuesday that includes new buildings designed so they can evolve and expand as patient needs change over the coming decades. The project is part of a Mayo strategy to transform... Read More

    News From The Well
    scroll top