“These agreements reduce other online marketplaces’ ability to compete with Amazon by offering lower prices to consumers,” Racine said in a prepared statement. As a result, Racine concludes, the sellers have an incentive to charge more for their products on non-Amazon marketplaces to ensure that Amazon doesn’t drop its price based on lower prices elsewhere. ‘We offer low prices across a broad selection’
In the contracts, called Minimum Margin Agreements, the attorney general alleges, first-party sellers must agree to a minimum profit for Amazon. In the event that Amazon sells the product for a price that falls short of that profit, the agreement dictates that first-party sellers have to pay Amazon the difference in an arrangement called a “true-up,” according to the amended complaint. “Amazon employs a different anti-competitive agreement with its first-party sellers to insulate it from competition from other online marketplaces,” the amended complaint states. “In their sales agreements, first-party sellers and Amazon agree that the first-party seller guarantees Amazon a certain minimum profit when Amazon sells the products it purchased from the first-party seller on Amazon’s online marketplace.”
Andy Jassy, then CEO Amazon Web Services and now CEO of Amazon, speaks at the WSJD Live conference in Laguna Beach, California, U.S., October 25, 2016. REUTERS/Mike Blake In the amended suit, Washington, DC Attorney General Karl Racine adds claims that Amazon had anti-competitive agreements with wholesalers, otherwise known as “first-party sellers,” that sell products to Amazon for the company to resell to its retail consumers.
The claims went on to say that Amazon “suppressed competition from other online retail sales platforms, such as eBay, Walmart, and even the TPSs’ own websites.” The AG has asked for the court to prevent Amazon from continuing its alleged anticompetitive conduct, including through mandatory divestitures, if necessary, and by appointing a corporate monitor to ensure compliance with any court-imposed remedies. The AG is also asking for monetary damages but did not specify the amount, and for the court to strip Amazon of any illegally obtained gains. Amazon’s third-party seller agreement, up until at least 2019, the complaint alleged, included a clause that explicitly barred sellers from offering products on competing sites.
Story continues In the first complaint, the AG targeted Amazon’s rules for allegedly increasing the price of retail items across the entire online marketplace, ultimately harming both everyday consumers and third-party sellers.
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