District of Columbia Attorney General Karl Racine widened the scope of his antitrust complaint against Amazon, bringing its relationship with wholesale suppliers under the microscope, CNBC reported Monday (Sept. 13).
In May, Racine sued Amazon, saying the company has monopolistic powers because of its pricing contracts with third-party sellers, who sell on Amazon under their own brand names. Now, Racine said Amazon is engaged in anticompetitive acts with wholesalers known as first-party sellers, according to the report.
In his new filing, Racine said Amazon’s “Minimum Margin Agreement” with first-party sellers has the “practical effect” of incentivizing wholesalers to raise their prices for online marketplaces outside of Amazon because those deals force the wholesaler to guarantee Amazon a minimum profit, the report stated.
“These agreements reduce other online marketplaces’ ability to compete with Amazon by offering lower prices to consumers,” the complaint stated, per CNBC. The practice “results in reduced competition among online marketplaces and higher prices to consumers.”
Racine issued a statement saying Amazon has used its dominant position in eCommerce to “rig the system,” meaning consumers pay higher prices and there’s less competition among online marketplaces, according to the report.
Racine’s office uncovered Amazon’s “anti-competitive” agreements with first-party sellers during its investigation of its relationships with third-party sellers, the report stated.
Amazon spokesperson Jack Evans told CNBC that Amazon stands behind its previous statement on Racine’s first lawsuit against the company.
“The D.C. Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store,” Evans said in the statement sent to CNBC. “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. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law.”
Last month, Amazon debuted a website that is aimed at getting sellers on its side in its battle against proposed antitrust legislation. The site lets sellers sign up to get information from the company’s public policy team about the legislation, which is aimed at curtailing the power of Amazon and other Big Tech companies.
Read more: New Amazon Website Blasts Antitrust Laws
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