Mergers & Antitrust Law News

Amazon Accused of Monopolization, Sweeping Price-Fixing Scheme

March 20, 2020, 2:01 PM

Amazon.com Inc. was hit with antitrust claims in Seattle federal court over an alleged “pricing scheme that broadly and anti-competitively impacts virtually all products offered for sale in the U.S. retail e-commerce market.”

“Amazon’s horizontal price-fixing agreement with its two million sellers is a per se violation of antitrust law,” the lawsuit says.

The proposed consumer class action targeting the e-commerce giant, which is responsible for 49% of U.S. online retail sales, was filed late Thursday in the U.S. District Court for the Western District of Washington.

The suit accuses Amazon of continuing to enforce de facto “most favored nation” pricing terms against 2 million third-party sellers offering 600 million products, despite promising the Federal Trade Commission last year that it would stop.

When the mega-retailer abandoned that policy, it was supposed to begin permitting merchants to offer lower prices through cheaper competing platforms, like eBay or their own websites, according to the complaint.

The companies should be able to turn the same profit at a lower price on those other platforms, which should in turn reduce Amazon’s prices through competition, the suit says.

But Amazon allegedly reframed the same rule as a requirement of its “fair pricing” agreements with third-party sellers, which account for 68% of its total sales. The provision explicitly requires any product sold on Amazon to “have a price that is equal to or lower than the price of the same item being sold by the seller on other sites,” according to the complaint.

“Sellers are contractually barred or severely penalized from passing on these savings to their customers,” the suit says.

Thanks to Amazon’s dominance in the e-commerce market, its policies have jacked up prices across the board, the consumer plaintiffs claim.

The company also allegedly “exercises a significant level of control over the flow of available information to consumers on the internet.” Other large retailers like Walmart and Target recently complained to the FTC that they can’t break through the “information bottleneck” caused by the “collective control” Amazon and Google have over online product searches, the suit says.

The plaintiffs note early in the complaint that they’re aware of “the drain” imposed by the ongoing coronavirus pandemic on “scarce judicial resources.” Waiting to sue wasn’t an option, but they’re willing to “work with defendant to reach an agreeable schedule,” the suit says.

Cause of Action: Sections 1 and 2 of the Sherman Act; state consumer protection laws; unjust enrichment.

Relief: Class certification, an injunction, treble damages, costs, fees, and interest.

Potential Class Size: Tens of millions of Amazon customers nationwide.

Response: An Amazon spokeswoman declined to comment Friday, citing the ongoing nature of the litigation.

Attorneys: The plaintiffs are represented by Hagens Berman Sobol Shapiro LLP and Keller Rohrback LLP.

The case is Frame-Wilson v. Amazon.com Inc., W.D. Wash., No. 20-cv-424, complaint filed 3/19/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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