Regulators have been circling Amazon for years, alarmed at its heft and dominance. A new antitrust lawsuit will now test whether Amazon is ripping off consumers through anticompetitive behavior.
The attorney general for the slot wallet District of Colombia, Karl Racine, sued Amazon on May 25, claiming the online retail giant inflates prices by prohibiting the site’s third-party sellers from offering their products on other sites at lower prices than those listed on Amazon. Racine seeks a jury trial to force Amazon to stop the practice and impose other penalties.
Amazon (AMZN) is surely an aggressive retailer, perhaps even a monopolistic one. But there’s one huge barrier to nailing Amazon with antitrust litigation: It’s not clear Amazon harms consumers, and there’s a solid argument that Amazon has been great for shoppers. Amazon’s rapid delivery to almost anywhere has forced every other retailer to improve its service, and its vast selection saves shoppers hours of time prowling store aisles for oddball items. Amazon ranks No. 5 among Morning Consult’s most trusted brands—behind Google, PayPal, Microsoft and YouTube—hardly the sort of perch occupied by corporate villains.
The DC lawsuit focuses on pricing, arguing that DC residents “have been injured because they have been denied a competitive marketplace for online retail sales and paid higher prices for products than they would have paid absent Amazon’s anticompetitive acts.” Amazon charges third-party sellers commissions that can exceed 30%, which adds to costs and in theory pushes prices up. Since Amazon doesn’t let those merchants sell the same products for lower prices on sites that charge lower commissions, or none at all, the idea is that Amazon must be setting a floor on prices that no other online retailer can undercut. Third-party sellers can’t even offer products for less on their own websites. If they try and Amazon catches them, it can cut them off.