DC Attorney General Addresses Amazon’s First Company in Amended Antitrust Complaint

Washington, DC Attorney General Karl Racine on Monday extended his antitrust lawsuit against Amazon against the company’s relationships with wholesale suppliers.

Racine sued Amazon in May over allegations that the company was illegally maintaining monopoly power through its pricing contracts with third-party sellers.

The amended complaint expands Racine’s initial allegations to include what it claims are the anti-competitive effects of Amazon’s deals with first-hand sellers, also known as FPS or wholesalers. The original complaint focused on how Amazon’s contracts with third-party sellers (TPS) or those who sell to Amazon under their own brands allegedly stifle competition.

The Washington Post first reported the news of Racine’s amended complaint.

Much of Amazon’s dominance in e-commerce comes from its third-party market. This service is made up of millions of independent merchants who rely on Amazon’s logistics and compliance services to get their products to customers ’doors. Amazon also buys products from other companies, known as sellers or first-hand sellers, and then takes care of the sales process.

In the new presentation, Racine alleges that Amazon’s “Minimum Margin Agreement” with first-hand sellers has the “practical effect” of encouraging wholesalers to raise their prices in markets outside of Amazon.

This is because these agreements require the wholesaler to guarantee Amazon a minimum profit, according to the complaint, which means the seller must make up the difference if it does not reach that margin. Racine alleges that first-hand sellers may be inclined to raise their prices elsewhere “to ensure that Amazon does not lower its price based on lower prices elsewhere.”

“These agreements reduce the ability of other online markets to compete with Amazon by offering lower prices to consumers,” according to the complaint, which goes on to say that the practice “reduces competition between online markets and higher prices to consumers.” “.

Vendors like the popular phone accessory maker PopSockets have previously highlighted Amazon’s aggressive pricing tactics as a persistent problem they encountered when selling their products in the company’s marketplace.

In a statement, Racine said Amazon has used its dominant position in e-commerce to “fix the system,” resulting in higher prices for consumers and less competition among online markets. Racine said his office discovered Amazon’s “anti-competitive” agreements with first-hand sellers while investigating its relationships with third-party sellers.

“I filed this antitrust lawsuit to defend consumers, hold Amazon accountable for its anti-competitive practices, and protect competition,” Racine said in a statement. “We continue to do this with this modified complaint that adds more to Amazon’s misconduct.”

Amazon spokesman Jack Evans addressed CNBC in the company’s previous statement on Racine’s initial lawsuit.

“DC’s attorney general has it exactly backwards: sellers set their own prices for the products they offer in our store,” Evans said. “Amazon is proud of the fact that we offer low prices in a wider selection and, like any store, we reserve the right not to highlight offers to customers who are not competitively priced. The relief AG seeks would force Amazon to offer prices higher than strangely against the basic objectives of antitrust law. “

The company has previously argued that sellers set their own prices for products sold on Amazon and that they have the right not to display offers that are not competitively priced.

The amended complaint adds to Amazon’s growing antitrust control. In addition to Racine’s lawsuit, Amazon is also being investigated by the Federal Trade Commission over its retail and cloud trading practices, according to reports from several outlets.

There are also major antitrust reforms targeting big technologies through Congress and the European Commission has reduced Amazon’s treatment of third-party vendors, alleging it has anti-competitive behavior.