Prosecutors have asked the court to prevent Amazon from following the practices that it says have increased prices. They also demanded that the court remove ‘Amazon’s ability to harm competition’, inter alia by changing its structure.
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25 May 2021, 14:46 ET
Amazon has attracted particular attention among critics due to the comprehensive nature of its business. It operates a dominant web hosting operation, a streaming platform that competes with Netflix and Hulu and expands to brick-and-mortar grocery stores with the acquisition of Whole Foods.
But the lawsuit by Mr. Racine, a Democrat, addresses the core of his business: the online market for outside retailers that make up more than half of the products he sells.
The issue is how Amazon determines the pricing of the merchant list on their website. Amazon has required sellers to offer products at the same or lower prices than on other sites, known as a “most-favored country” policy. Regulators in Europe, and later Senator Richard Blumenthal, a Democrat from Connecticut, questioned the policy. In 2019, Amazon abandoned it from its service agreement with sellers in the United States.
According to Racine’s complaint, Amazon replaced the policy in 2019 with an ‘effectively-identical replacement’, which it called its ‘fair pricing policy’. With the new policy, the complaint reads, Amazon could impose ‘sanctions’ on sellers whose products are offered elsewhere at lower prices, even if it costs them less to list on other platforms, including their own website.
Amazon has introduced other measures to limit lower prices elsewhere. More importantly, it sometimes removed prominent buttons such as “Buy Now” and “Add to Cart” from a product listing entry page, making it more difficult for a buyer to purchase the item. Sellers say the change reduces sales. According to the complaint, Amazon can also ban sellers from their website.
“This is an everyday kind of event for any seller on Amazon,” said James Thomson, a former Amazon employee who helped build Amazon’s market business and now advises sellers. He said there are legitimate reasons why a product may cost less elsewhere. It could be cheaper to sell on another website, for example, or a website could be a liquid product.