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Washington, DC sues Amazon for alleged antitrust violations

E-commerce giant unfairly raises prices and suppresses innovation, says Washington, DC AG

Washington, DC has sued Amazon for anti-competitive practices. The lawsuit, filed in DC Superior Court on Tuesday, accuses the company of unfairly manipulating its third-party sellers with an intent to monopolize the online retail sales market.

In the lawsuit, DC Attorney General Karl A Racine focuses on a policy in Amazon's business solutions agreement (BSA) that applies to third-party sellers on its platform. The policy prohibits sellers from offering their products for lower prices on other e-commerce platforms, including their own websites.

This practice is anti-competitive and artificially raised prices, alleges the DC attorney general, because it forces third-party sellers to fold Amazon's high seller fees into their product prices and then charge those prices everywhere. Those fees could sometimes account for 40% of the product price.

Amazon originally called this policy the price parity provision (PPP). It was in place until 2013 in Europe, when UK and German regulators launched an investigation. Amazon removed the PPP in that region but kept it in its mandatory agreement with US sellers until 2019, when it removed it after US government scrutiny.

The lawsuit explains the company replaced PPP with what Racine calls the "effectively-identical" fair pricing policy (FPP). Amazon could ban sellers who violated the FPP by offering their products cheaper on another platform.

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The lawsuit complained, "Competition and consumers were directly harmed by virtue of higher prices, as well as through the loss of choice, innovation, and competition among online retail sales platforms, as other online retail sales platforms were not able to use lower product prices to lure buyers and sellers to their competing online retail sales platform and capture some of Amazon's dominant market share."

These policies have helped the e-commerce giant capture more market share, claimed the lawsuit, which also accused the company of creating unreasonable vertical agreements with sellers. The mandatory agreements demonstrate its intent to monopolize online retail sales, the lawsuit said, adding there was a "dangerous probability" it would succeed.

The lawsuit is another sign of changing government views on antitrust issues. At the federal level, the President nominated Lina Khan, a prominent antitrust lawyer and critic of big tech, as FTC commissioner in March. Khan has warned against allowing platforms like Amazon to engage in anti-competitive behavior.

In March 2020, Racine joined a group of 34 state AGs to urge Amazon, Craigslist, eBay, Facebook, and Walmart to crack down on online price gouging on their platforms during the pandemic.

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