Monday, March 27, 2023

‘Gag contracts’: California files antitrust lawsuit against Amazon

The most populous US state, California, has sued the world’s largest online mail order company, Amazon, for alleged antitrust violations. Attorney General Rob Bonta said Wednesday in San Francisco that the company is raising prices through anti-competitive behavior in violation of California law.

Among other things, Bonta accused Amazon of forcing third-party providers into bond contracts that prevent them from selling their goods cheaper on other trading platforms. Due to the great market power of the group, the short sellers could not defend themselves, and the end customers would eventually pay the inflated prices. “The reality is, many of the products we buy online will be cheaper under the forces of the free market,” Bonta said.

Amazon fights back

The prosecutor argued that for hundreds of thousands of third-party providers, Amazon’s online marketplace represents virtually their entire business. Because of the high degree of dependability, the company can dictate terms to them. Critics have long accused Amazon of abusing its market power. The allegations also include that the group endorses its own brands on the platform, uses business data to spy on third parties and copies their product ideas.

An Amazon spokesperson said sellers set their own prices for products sold on Amazon. “Amazon prides itself on offering low prices in the widest selection, and like any store, we reserve the right not to highlight offers to customers who are not competitively priced.” Customers are compelled, which would be against the original objectives of the antitrust law, the group argued. It is expected that a California court will dismiss the lawsuit immediately.

Nation World News Desk
Nation World News Desk
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