DC Files Lawsuit Against Amazon Alleging Antitrust Violations

Attorney general for the District of Columbia Karl Racine filed an antitrust lawsuit against Amazon, claiming the tech giant abuses its monopoly power by artificially raising product prices. The suit adds that Amazon blocks vendors from charging lower prices for the same products elsewhere, which results in higher prices for these products on Amazon and other marketplaces. This marks the first time a U.S. government entity has filed a suit against Amazon. Racine stated that, “Amazon has used its dominant position in the online retail market to win at all costs.”

The New York Times reports Amazon spokeswoman Jodi Seth countered that, “sellers set their own prices for the products they offer in our store … [and that Amazon has the right] not to highlight offers to customers that are not priced competitively.”

Filed in DC Superior Court, the lawsuit is part of “the early but growing interest in charges that Amazon’s aggressive practices have squeezed small businesses, killed innovation and given it a monopoly over commerce in the digital age.” The Federal Trade Commission is also “investigating whether Amazon violated antitrust laws, although its questions have yet to yield a legal complaint.”

NYT notes that the DC suit is “somewhat limited in scope,” in that “it was not joined by prosecutors in other states or U.S. jurisdictions, meaning that Racine cannot draw on the resources of other attorneys general in court.” It points out that states’ suits against Facebook and Google were “jointly filed late last year by dozens of attorneys general.”

The lawsuit also only concerns outside merchants of Amazon’s core e-commerce platform, representing about half of the products on the site. Because the suit was filed in the district’s court, “any judgment or settlement would only apply to Washington, DC.” Still critics of Amazon such as American Economic Liberties Project executive director Sarah Miller hailed it as “momentum to break the extraordinary and dangerous power of Big Tech.”

CNBC reports that, “Racine is seeking to end what he alleges is Amazon’s illegal use of price agreements to edge out competition … [and also] asks for damages and penalties to deter similar conduct.”

Until 2020, Amazon’s contract with third-party sellers included a “price parity provision,” which prohibited them from offering the products on a rival’s online marketplace for a lower price That provision was removed in March 2010 “amid growing antitrust scrutiny.” But critics pointed out that Amazon replaced it with a nearly identical provision: its “fair pricing policy” allows Amazon to “impose sanctions” on a seller that offers products for a lower price on rival marketplaces. Racine dubbed this a “bait and switch.”

The House Judiciary Subcommittee on Antitrust also mentioned Amazon’s agreements with vendors, saying Amazon requires they adhere to “most favored nation” provisions. “We know that those clauses are disfavored in law, particularly when a company like Amazon has monopoly power,” said Racine, who added that this issue was “one he felt his office could take on its own,” although he “didn’t rule out the possibility of other states or federal enforcers getting involved.”