Amazon Hit With Antitrust Class Action
The suit, filed Thursday by Seattle attorneys Steve Berman and Derek Loeser, alleges that Amazon's policies with third-party sellers force them to sell their products on other online sites at the same prices as they do on Amazon. That restricts competition in violation of the Sherman Act, the suit says.
March 20, 2020 at 05:34 PM
4 minute read
A class action alleges Amazon.com Inc. violates federal antitrust laws by monopolizing the online retail marketplace through agreements with third-party sellers.
The lawsuit, filed Thursday by two customers, one in California and one in Virginia, says Amazon's policies with third-party sellers force them to sell their products on their own sites, or competitor sites, at the same prices as they do on Amazon. That restricts competition for shoppers looking for the best prices, the suit says.
"Amazon has obtained monopoly power in the U.S. retail e-commerce market, as demonstrated by its power to set the prevailing prices of the vast majority of consumer goods offered for sale on the internet and that it exercises extraordinary control over millions of its online retail competitors," says the suit, filed in U.S. District Court for the Western District of Washington. "By enforcing these provisions, Amazon creates a price floor that its third-party sellers must adhere to in all retail e-commerce channels that compete with the Amazon.com platform, thereby causing supracompetitive prices for class products in the U.S. retail e-commerce market."
Neither Steve Berman, of Hagens Berman Sobol Shapiro, nor Derek Loeser, of Keller Rohrback, both of Seattle, responded to a request for comment.
An Amazon representative also did not respond to a request for comment.
The suit comes as the U.S. Department of Justice and the Federal Trade Commission launched antitrust investigations of high-tech companies, including Amazon, last year. The House Judiciary Committee also requested information about Amazon's market share.
Amazon accounts for half of all U.S. retail e-commerce, the suit says, and about 2 million third-party sellers sell about 600 million products on Amazon. Third-party sellers make 81% to 100% of their revenues from sales on Amazon.
When a third-party seller wants to sell goods on Amazon, they must agree to its business services agreement, which has included a "platform most favored nation" provision that governed the price of products sold on other online sites, the suit says. Last year, after the FTC launched its investigation, Amazon withdrew the provision but continued to enforce a "fair pricing" policy, "which likewise severely penalizes sellers who offer lower prices outside the Amazon.com platform."
Absent Amazon's policies, third-party sellers would be able to offer their products on competing websites for 15% less than the prices on Amazon, the suit says.
"From the third-party retailers' perspective, Amazon Marketplace is like Hotel California, a lovely place to start or expand an online retail business, but check out from Amazon Marketplace and you can quickly find your business in bankruptcy," the suit says.
The case, brought on behalf of a nationwide class of Amazon consumers, estimated to be in the tens of millions, seeks punitive and treble damages under the Sherman Act. Class members are those who comparison-shopped for "class products," or those sold on Amazon and other sites for the same prices. The complaint estimates Amazon's policies have caused $55 billion to $172 billion in actual damages.
In a footnote, plaintiffs lawyers acknowledged the disruption that the coronavirus outbreak could have on the case.
"Plaintiffs are mindful of the severe impact of the corona virus pandemic on all aspects of society," the footnote says. "In particular, they are aware of the burden this crisis places on small businesses and larger corporations alike, as well as the drain it imposes on scarce judicial resources. Plaintiffs are compelled, however, to file now to preserve their rights and those of the proposed class. To minimize the burden on the court and to reasonably accommodate Amazon, plaintiffs will work with defendant to reach an agreeable schedule for its response to the complaint."
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