Amazon’s online retail monopoly violates antitrust law and leaves consumers paying artificially high prices, according to a lawsuit filed by Washington DC’s attorney general on Tuesday.
Vendors who sell their products on Amazon currently are forbidden from offering their own products with better terms or lower prices on other platforms, including their own websites, leading to “artificially high” prices across the market, DC Attorney General Karl Racine said while announcing the suit.
“[Amazon] 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.”
Amazon, led by CEO Jeff Bezos, currently controls 50 percent to 70 percent of global online retail, the attorney general said. This dominant position means that sellers are forced to choose between setting fair prices and losing market access, according to the suit.
An Amazon spokesperson pushed back against Racine’s assertions and argued that, if the suit is successful, it will lead to higher prices on the site.
“The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store,” the spokesperson said. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
The development comes as Amazon faces regulatory scrutiny from federal lawmakers of both parties. In March, President Joe Biden nominated tech and monopoly critic Lina Khan to the Federal Trade Commission, which enforces federal antitrust laws. Republicans including Texas Senator Ted Cruz and Mississippi Senator Roger Wicker supported her nomination.
The Washington D.C. attorney general’s suit was filed in D.C. Superior Court under the district’s antitrust laws rather than in federal court, meaning that any potential decision may not affect Amazon’s operations outside the city.
“The implication of that is that if the state AG should win this suit, it probably means that the impact will be very limited outside of Washington D.C.,” University of Pennsylvania law professor and antitrust expert Herbert Hovenkamp told The Post, adding that he expects the suit to take years to resolve.
Aaron Edlin, a professor of law and economics at the University of California, Berkeley told the Post that the D.C. attorney general’s suit will likely be followed by a broader federal suit in the coming years.
“I think the winds are blowing strongly in that direction,” Edlin said of a potential Department of Justice or Federal Trade Commission suit, adding that he gives the possibility “better than even odds.”
Progressive groups in DC have long pushed for antitrust actions against Amazon and are now gaining bipartisan acceptance and support.
“Amazon is essentially insulting against the consequences of their higher prices by preventing lower-priced alternatives from resulting in lower consumer prices,” Alex Harman, a competition policy advocate at progressive group Public Citizen, told The Post. “There is a lack of choice and they need to be held to account.”
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