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Amazon Sued By D.C. Court Over Price Inflating And Abuse Of Monopoly Power

Attorney General Karl Racine Takes On Amazon

Amazon is in for a “Prime” court battle as Washington, D.C., Attorney General Karl Racine is suing the online giant. The company is accused of unfairly inflating prices and stifling its competition. Amazons practices, Racine says, gives the company an ever-increasing stronghold on the online retail market.

The complaint which alleges violations by Amazon of the District of Columbia Antitrust Act can be viewed here. Also the filing demands a jury trial. The complaint includes the following language:

Amazon’s online retail sales platform benefits from, and is protected by, Amazon’s anticompetitive(sic) business practices. Far from enabling consumers to obtain the best products at the lowest prices, Amazon instead causes prices across the entire online retail sales market to be artificially inflated, both for products sold on Amazon’s online retail sales platform and on its competitors’ online retail sales platforms.


Focus Of the D.C. Court Case Against Amazon

Washington, D.C. Courthouse

Amazon is set to appear before a Judge and Jury to answer a complaint it uses unfair, monopolistic practices to bully sellers and inflate prices to it’s advantage

The lawsuit claims that Amazon places restrictions on third-party-sellers they must agree to in order to list and sell their products on the Amazon platform. These restrictions include forbidding a seller from selling their products on any other online platform, including their own websites for a lower price than on Amazon! Since sellers pay Amazon up to 40% in fees for each sale this means their prices must be higher, yet they cannot offer the items anywhere else for a lower price on a platform that has a lower cost. The result, the complaint says, is higher prices for consumers.

“Amazon is estimated to have between 50 to 70% of the market share of the online retail sales market. By contrast, the next two largest retail platforms, and eBay, have only around 5% of the market each,”

Washington, D.C., Attorney General Karl Racine

As a result, Racine says, Amazon has an ever-increasing stronghold on the online retail market. A serious complaint – and possibly difficult to prove.

Who Me? Says Amazon

Amazon of course has issued a statement in dispute of the D.C. complaint. The company says all is not what it seems, “[Racine] has it exactly backwards – sellers set their own prices for the products they offer in our store. 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.”

Amazon says the lawsuit seeks relief – including “structural changes and a corporate monitor as well as penalties and damages”, and states that such relief and penalties “would force Amazon to feature higher prices to customers.”

Higher prices, lower prices, backwards or forward – this will prove a very interesting court drama to follow if you are an online seller. However these cases can take time – a long time! Can you say Microsoft Corp. v. Commission (European Commission of the European Union). Citing ongoing abuse by Microsoft, the EU reached a preliminary decision in the case in 2003 and in 2004 ordered the company to pay $794 million in fines. This started from a complaint from Sun Microsystems over Microsoft’s licensing practices in 1993! Of course Microsoft was not happy about the way that case turned out.

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