The state of California has charged Amazon with violating competition law by preventing sellers from offering lower prices elsewhere.

According to the lawsuit, the moves have harmed competitors and increased the cost of online shopping for everyone.

It is the most serious legal threat Amazon has faced in the United States.

However, a similar lawsuit in the United States was dismissed earlier this year due to insufficient evidence of higher prices.
Proving consumer harm in the form of higher prices is a critical issue in US competition law.

Amazon stated that, similarly to the DC case, California’s complaint was “exactly backwards” and that the lawsuit should be dismissed.

According to the company, “sellers set their own prices for the products they offer in our store.” “Amazon takes pride in offering low prices across the widest selection, and we reserve the right, like any store, not to highlight offers to customers that are not priced competitively.”

According to the complaint, Amazon’s contracts require sellers to offer the lowest price on Amazon, limiting the ability of other websites to compete.
By preserving Amazon’s market dominance, the agreements allow the company to raise fees on merchants, which eventually trickle down to consumers in the form of higher prices.

“Amazon understands that its price parity agreements keep competitors from stealing market share with lower prices that reflect their lower fees. So Amazon continues to raise fees, which leads to higher prices on Amazon, which leads to higher prices off Amazon due to price parity, “According to the lawsuit.

According to the company, this has resulted in “a vicious anticompetitive cycle in which Amazon wins and its third-party sellers, wholesale suppliers, consumers, and competition lose.”

The lawsuit also accuses Amazon of punishing merchants who violate the rules by lowering their listings in search results.

“The reality is that many of the products we buy online would be cheaper if market forces were allowed to operate freely,” California Attorney General Rob Bonta said in a statement announcing the lawsuit.

Though the lawsuit is limited to California, given the state’s size, its impact could be far-reaching.

The lawsuit comes as regulators, particularly in the European Union, are increasingly questioning the dominance of a few tech behemoths.

This summer, Amazon attempted to settle a case brought by the EU accusing it of using seller data to compete against them.

Amazon is also being investigated in the United Kingdom over allegations that it gives certain sellers an unfair advantage on its marketplace.

Meanwhile, an EU court this week upheld a record fine against Google for using the Android platform to consolidate its search engine’s dominance.