On Tuesday, Karl Racine, Attorney General for the District of Columbia, filed a lawsuit against Amazon.com Inc. alleging that the company fixes online retail prices through its contractual agreements with third-party sellers and policies. In turn, the antitrust complaint argues, Amazon imposes an artificially high price minimum across the online retail marketplace and has built and maintains monopoly power in violation of the District of Columbia’s Antitrust Act.
The filing explained that Amazon is the largest online retailer worldwide, controlling between 50 and 70% of the online sales market. It claimed that more than two million independent third-party sellers rely on the Amazon Marketplace to sell their goods, but this comes at a cost.
The attorney general chiefly took issue with “most favored nation” (MFN) agreements that prevent Amazon third-party sellers from offering products at more competitive prices or on better terms with any other online platform. Reportedly, the prohibition even restricts sellers from doing so on their own websites.
MFN agreements in effect require third-party sellers to lop on fees charged by Amazon, up to 40% of the total product price, not only for Amazon shoppers but also for those purchasing impacted products on other online retail platforms, the complaint alleged. The attorney general contended that these agreements harm consumers, sellers, and free and fair competition.
In a press release, D.C. Attorney General Racine commented on the filing. “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,” he 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.”