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Amazon faces court over ‘unfair’ pricing

John Fitzsimons
Written By:
John Fitzsimons

Online shopping giant Amazon is being sued by Washington DC over claims that its business practices are resulting in higher prices for shoppers.

The retailer has been accused of charging third-party merchants who sell through the site fees of as much as 40% of the item’s price in order to sell through Amazon. In addition, retailers are allegedly forced not to charge smaller prices for their items when selling through other platforms.

Suppressing competition

According to the attorney general’s office, which is bringing the case, these agreements are imposing artificially high prices for items being sold through Amazon, and are allowing the site to build a monopoly. 

It argued that that Amazon is effectively suppressing “competition, choice and innovation”, and is pursuing the retailer for damages and penalties, as well as putting an end to the sort of restrictive agreements it is accused of enforcing.

Karl Racine, the attorney general, said: “Amazon has used its dominant position in the online retail market to win at all costs. It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favour.” 

Sellers set their own prices

The claim has been dismissed by Amazon though, which argued that the attorney general has the situation “exactly backwards”, with sellers able to set their own prices for the items they sell through the Amazon marketplace.

A spokesperson added: “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.”

Tackling pricing practices

Amazon is not the only online giant to face potential court action over its pricing. Apple for example is being investigated by the Competition and Markets Authority (CMA) over its practice of charging commission of up to 30% for purchases made through its app store, while it is also subject to a claim being taken to the Competition Appeal Tribunal over its “restrictive terms”.

A similar claim is also being pursued to the Competition Appeal Tribunal against Google by Epic Games, the maker of the Fortnite video game.