Is Amazon making shopping unaffordable on other websites?
What's the story
California's Attorney General Rob Bonta has accused Amazon of engaging in a widespread price-fixing scheme. The allegations were made in a court filing unsealed yesterday, as part of California's ongoing antitrust lawsuit against the e-commerce giant. Bonta claimed that Amazon used its dominant position in the market to pressure brands into raising their prices on other retailers' websites.
Coercion methods
Amazon allegedly coerced brands into raising prices
The Attorney General detailed how Amazon allegedly coerced brands into raising their prices. He claimed that the company would ask a vendor to "fix," "correct," "increase," "raise," or "look into" product prices on other retailers' websites. The expectation was that the vendor would eventually raise its prices everywhere but on Amazon. To achieve this, the e-commerce giant would allegedly threaten punishment by restricting advertising, demanding compensation, or removing products from its platform altogether.
Strategy breakdown
Price-fixing campaign involved 3 strategies
Bonta's office alleged that Amazon's price-fixing campaign involved three strategies. The first was getting a vendor to agree to a price increase and forcing other retailers to match it. The second involved asking other retailers to raise their prices first so that Amazon could match them on its platform. The third strategy involved getting a vendor to remove a product from a competing retailer selling it at a lower price than Amazon, after which the latter would raise its own price since no competitor was keeping costs down.
Brand impact
Major brands affected by Amazon's alleged scheme
Bonta's office found that several major brands were affected by Amazon's alleged price-fixing scheme. These include Levi's, Hanes, pharmaceutical giant Allergan, and pet food giant GlobalOne. The filings contain communications between Amazon and these brands that appear to confirm the allegations of price-fixing. For instance, after complaining about lower prices on Home Depot's website for Agrothrive products, the vendor contacted Home Depot which agreed to raise its prices "this time."
Legal battle
Bonta vows to take Amazon to court
Bonta has vowed to take Amazon to court over these allegations. He said, "The evidence we've uncovered is clear: Amazon is working to make your life more unaffordable." The Attorney General accused the firm of colluding with vendors and other retailers to raise costs for Americans beyond what the market requires. "Amid a crisis of affordability, Amazon is illegally working to rake in profits by making sure consumers have nowhere else to turn to for lower prices," he added.