A fresh lawsuit filed in California accuses Amazon of forcing merchants to hike prices throughout the web. As per the court filing, the tech giant is charged with using its market dominance to keep prices high on competing platforms.
The lawsuit is part of an ongoing lawsuit against the retail giant that started in 2022 and will go to trial in 2027. The lawsuit is based on the idea that Amazon didn’t fix prices directly through price-fixing. In contrast, the tech giant allegedly forced merchants to ensure that its products aren’t cheaper elsewhere.
Price fixing happens when companies agree to set prices. This is considered an anti-trust practice in the US. In this case, however, the state has alleged that Amazon took an alternative approach, telling sellers to hike prices elsewhere or risk being penalized on its platform.
How Amazon’s Alleged Leverage Stifled Market Competition
According to the filing, Amazon employees contacted sellers with clear instructions. They asked them to “fix,” “raise,” or “manage” prices on rival marketplaces. Vendors who did not comply risked losing visibility, promotions, or even access to Amazon’s marketplace.
The pressure worked, the state says. Many vendors depend on Amazon for a large share of their sales. Losing that access could harm their business. This gave Amazon strong leverage in these talks.
One example in the filing involves Levi Strauss & Co. and Walmart. Amazon raised concerns about lower prices for certain pants sold on Walmart. A Levi’s employee then contacted Walmart, and the price was raised. Amazon later matched the higher price.
In another case, a home goods vendor was asked to compensate Amazon for lost profits after it lowered prices to match those of The Home Depot. The vendor later told Amazon it had convinced Home Depot to increase its prices. Similar stories appear throughout the filing, including vendors of fertiliser, trash cans, and salt lamps.
Some vendors went further. They removed products from rival sites to avoid conflict with Amazon. Others pushed retailers to stop discounts. These actions, the state argues, reduced price competition across the market.
California Lawsuit Alleges Amazon Silenced Price Competition Through “Off-the-Record” Deals
The filing also claims Amazon tried to avoid leaving a paper trail. Employees allegedly advised vendors to discuss pricing over calls instead of email. One message described pricing as a “delicate conversation” better handled off record.
Bonta argues that these actions hurt consumers. If prices stay high across platforms, shoppers lose the chance to find better deals. He says this behaviour comes at a time when many people already struggle with rising costs.
“Consumers have nowhere else to turn to for lower prices,” his office claims in the filing. He has asked the court to block Amazon from discussing competitors’ prices with vendors. He also wants an independent monitor to oversee the company’s conduct.
The Battle Over Digital Price Control: Examining Market Power Limits
Amazon rejects the claims. The company says the case lacks merit and that the evidence is not new. It argues that it remains one of the lowest-priced retailers in the market. In its response, Amazon said it looks forward to defending itself in court.
The company has long maintained rules that encourage sellers to keep prices low. Critics say those rules can have the opposite effect. If sellers fear penalties, they may avoid offering discounts elsewhere.
This case adds to a growing number of antitrust actions against large tech firms. Regulators in the US and other countries have started to question how these companies use their scale. The focus often falls on whether they limit competition or control pricing in subtle ways.
This case might set an example for online marketplaces. If the judge is going to rule in favour of California, the whole system that Amazon works on might have to be reconsidered by many other online marketplaces.
As things stand now, the case still needs further development. Both parties will introduce evidence during the trial period. It will be determined whether Amazon went too far.
It should be noted that all these accusations have not been proven yet and need further investigation. However, this case raises a very important question: what is the limit to market power?
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