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Lawsuit Puts Amazon Wholesale Policies In Crosshairs

An antitrust lawsuit targeting Amazon in the US has been expanded to cover wholesale products, accusing the online retail giant of artificially inflating prices.

The complaint, filed by Washington DC Attorney-General Karl Racine in May, originally covered products from third-party sellers, alleging that Amazon’s “most favoured nation” policies prevent these sellers from undercutting its own prices – even on external websites.

In the updated suit, Racine goes further, saying Amazon’s “minimum margin agreements” with wholesalers – which dictate the minimum profit Amazon must make from reselling products, and force wholesalers to compensate it for the difference if it makes less than this – incentivise first-party sellers (FPSs) to increase their prices on other online marketplaces.

“FPSs have raised their prices to competing online marketplaces to prompt the maintenance of higher prices on those marketplaces and even asked those marketplaces to raise prices to online consumers to avoid triggering Amazon’s minimum margin protection.

“These agreements reduce other online marketplaces’ ability to compete with Amazon by offering lower prices to consumers,” the complaint reads.

Karl Racine.

Racine in May slammed Amazon for using its dominant market position to “win at all costs”.

“It maximises its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favour.

“We filed this antitrust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market,” he said.

In a statement to Bloomberg, an Amazon spokesman defended the policies as ensuring consumer choice and product affordability.

“The outcome the D.C. Attorney General seeks would result in higher prices to customers, whether offered directly by Amazon or by third parties in our store, oddly going against core objectives of antitrust law,” the spokesman said.

The suit aims to end what it calls Amazon’s “illegal price agreements”, as well as imposing penalties and collecting damages to deter similar future conduct.

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