The Office of the Attorney General (OAG) in Washington, D.C. is suing Amazon for allegedly fixing online prices for the third-party sellers on its eCommerce marketplace, according to a Tuesday (May 25) press release.
Attorney General Karl Racine is accusing Amazon of anticompetitive practices by preventing its third-party vendors from selling products on other platforms for a lower price. The practice results in consumers paying more and having fewer options, the AOG said.
“Amazon has used its dominant position in the online retail market to win at all costs. It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favor,” Racine said. “We filed this antitrust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market. We need a fair online marketplace that expands options available to District residents and promotes competition, innovation, and choice.”
The OAG said that Amazon uses policies known as “most favored nation” (MFN) agreements, which disallow vendors from offering lower prices or terms on other platforms, including the sellers’ own company websites. The end result is that retailers end up integrating Amazon’s fees into the price of products even if they decide to cross-sell merchandise elsewhere.
“The effects of these agreements continue to be far-reaching as they harm consumers and third-party sellers, and suppress competition, choice, and innovation. OAG is seeking to put an end to Amazon’s control over online retail pricing, as well as damages, penalties, and attorney’s fees,” according to the release.
The Federal Trade Commission (FTC) reportedly told Amazon last week that it has to put an end to fake product reviews on its digital marketplace. The eCommerce behemoth banned sellers of Chinese electronics brands after a data breach showed evidence of fake reviews. Amazon also filed numerous lawsuits relating to fake review schemes in the last six years. The FTC has taken action to detect fake reviewers.