Plaintiffs Resist Dismissal of Antitrust Class Action Against Amazon Over ‘Minimum Margin Agreements’

An opposition brief filed on Monday by California and Maryland consumer plaintiffs argues that Amazon’s minimum margin guarantee agreements (MMAs) have illegally increased the prices of a huge swath of goods bought online. The filing urges the Seattle, Wash. court to reject Amazon’s arguments to the contrary and let the class action proceed.

As previously reported, the July-filed suit claims that Amazon, the world’s largest retailer, operates the Amazon Marketplace platform, where the company conducts first-party sales that make up the bulk of its revenue. The crux of the case is that Amazon “coerces its suppliers to adopt minimum resale price policies” through MMAs.

The agreements allegedly guarantee that Amazon will be able to price suppliers’ products competitively against other online retailers the vast majority of the time and that Amazon will receive a minimum margin on each sale regardless of the actual price that Amazon sells the product for, the complaint says.

According to the plaintiffs, this enables Amazon to shift profit loss risk to suppliers while ensuring that they adopt a price floor. Amazon reportedly looks out for sellers who attempt to undercut the price of a product on Amazon and force them to compensate it for any lost margins necessitated by lowering its price to match a competitor.

The plaintiffs state antitrust claims under the Sherman Act as well as the analogue laws of California and Maryland for what they deem a naked restraint of trade.

Amazon moved to dismiss the consumer suit earlier this fall, justifying its contracts as legal and contending that the plaintiffs lack standing, among other arguments.

In this week’s response, the plaintiffs counter that the MMAs and consequent price floors are well within the reach of the antitrust laws. Further, the company’s assertion that MMAs are benign or procompetitive ignores the loss of price competition and higher consumer prices, the consumers contend. In this regard, the plaintiffs point to findings of the antitrust subcommittee of the House Judiciary, as well as other investigations finding that Amazon’s practices artificially hike prices.

As to standing, the plaintiffs assert that they are direct purchasers who overpaid for goods that would have been cheaper but for the MMAs. In addition, their proposed market definition is sound, the opposition says.

The case is before Judge John H. Chun.

The plaintiffs and putative classes are represented by Hagens Berman Sobol Shapiro LLP. Amazon is represented by Davis Wright Tremaine LLP and  Paul, Weiss, Rifkind, Wharton & Garrison LLP.