The California Attorney General, Rob Bonita, has charged Amazon with violating the state’s Unfair Competition Law. Here is how Forbes writer Brian Bushard explains it:
The lawsuit filed in San Francisco Superior Court alleges the company violated the state’s Unfair Competition Law and Cartwright Act by forcing merchants to enter agreements that “severely penalize” them for offering products at lower prices on other online retail sites.California Sues Amazon For ‘Thwarting’ Competition Through Seller Contracts, Brian Bushard, Forbes, September 14, 2022
By penalizing its merchants, Amazon is preventing the market from dictating price. In other words, under the Amazon contract, a merchant cannot offer its products at a lower price on its own or a third-party website (think Target.com). If it does, it gets penalized. If it doesn’t want to play, it gets booted from Amazon.
Attorney General Bonita sees these actions as punishing consumers and merchants. Merchants because they are not operating in a free market. Consumers because Amazon keeps prices higher than they would be if its restrictions were not in place.
What does the state of California want? Here is how Forbes puts it:
The lawsuit seeks a court order to prohibit Amazon from entering into anti-competitive contracts, appoint a court-approved monitor and return “ill-gotten gains” to other companies allegedly harmed by Amazon’s practices, although Bonta does not list a specific amount.California Sues Amazon For ‘Thwarting’ Competition Through Seller Contracts, Brian Bushard, Forbes, September 14, 2022
We all need to follow this lawsuit, as its outcome would impact Amazon everywhere in the U.S.