California state has filed an antitrust suit against Amazon, claiming it crushes competition and inflates prices on its website.
State Attorney General Rob Bonta challenged Amazon’s merchant agreements which prohibit sellers from providing lower pricing on rival sites and impose hefty fines if they do.
He states these agreements restrict other online retailers from competing, causing excessive fees for merchants and increased prices for consumers.
Mr Bonta said: “Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that they can’t afford to say no.
“For years, California consumers have paid more for their online purchases because of Amazon’s anticompetitive contracting practices.”
It is claimed Amazon finds a cheaper product on a competitor’s website, it will more often remove critical buttons such as “Buy Now” and “Add to Cart” from a product listing page.
These buttons are a big source of sales for companies selling on Amazon, and losing them could be detrimental to their business.
The lawsuit seeks that the court bars Amazon from imposing such regulations and appoint a monitor to verify the company’s compliance.
It also claims unspecified damages for economic loss to the state, as well as $2,500 for each infraction of the state’s civil and professional codes proven at trial.
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The California case is the latest in a slew of increasingly aggressive actions by states and regulators in Washington and Europe to regulate the dominance of the leading companies in the technology industry.
Also on Wednesday, September 14, a European Union court approved a multibillion-dollar penalty levied against Google in 2018.
In previous lawsuits, the company has denied breaching antitrust laws.
California has been looking into Amazon for over two years.
The complaint filed in San Francisco Superior Court said the practices violated California’s Unfair Competition Law and the Cartwright Act, the state’s primary antitrust law.
The suit is Amazon’s most significant legal challenge in the United States to date.
It was previously sued by the District of Columbia and is being investigated by the Federal Trade Commission, the European Union, and a congressional committee.
Amazon representatives did not immediately reply to a request for comment on the case.
Source: The Wall Street Journal