The Washington State AG said Amazon made it difficult for third-party sellers to make sales by limiting their ability to lower their prices.
what you need to know
- Amazon is shutting down its “Sold by Amazon” third-party seller program following an antitrust probe.
- The Washington company said it stifled competition by forcing sellers to sell their products at “artificially high prices.”
- The retail giant will also pay the state $2.25 million for antitrust enforcement efforts.
Amazon is embroiled in another antitrust lawsuit for allegedly fixing third-party prices and disrupting competition. The retail giant’s third-party seller program, “Sold by Amazon,” is shutting down following an investigation by the Washington state attorney general into illegal practices.
“Amazon unreasonably restricts competition in order to maximize its own third-party sales profits,” Washington firm Bob Ferguson said in a press release. The program’s pricing algorithms are said to increase the prices offered by third-party retailers. price, they must agree to continue participating in the program.
“The ‘Sell to Amazon’ program results in higher prices for certain products when Amazon programs its pricing algorithms to match the prices offered by certain external retailers to online consumers,” the AG said.
Sold by Amazon began in 2018, allowing the retail giant to agree on prices with third-party sellers in exchange for guaranteed minimum payments for product sales. However, that means they must “stop competing with Amazon on product pricing.” If Amazon sells the product at a higher price, the profits will be split among themselves.
The AG said the pricing practices limited the ability of sellers to lower the price of their products, if at all, as long as they were enrolled in the program. Sellers are also barred from offering discounts unless they opt out of the program. As a result, some retailers have seen their sales and profits drop as customers opt to buy the same products with Amazon’s branding, such as Amazon’s best Alexa devices and Amazon Echo Show.
“When corporate giants like Amazon increase profits by pricing, consumers lose out,” Ferguson said.
Amazon, on the other hand, disputed AG’s claims, saying the program was legitimate. A company representative told Android Central:
This is a small program designed to provide another tool to help sellers offer lower prices, and like similar programs commonly found at other retailers, this program has been discontinued. While we strongly believe the program is legitimate, we are glad this issue has been resolved.
In addition to ending the program, Amazon will pay $2.25 million to the attorney general’s office to assist with antitrust enforcement in the case. It is also required to update the AG’s office annually on its antitrust compliance.
Last year, the Washington, D.C. attorney general filed a similar lawsuit against Amazon, alleging that the company fixed online retail prices.
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