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California drags Amazon to court over antitrust law violations

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California has alleged that Amazon used contract provisions to effectively bar third-party sellers and wholesale suppliers from offering lower prices for products on non-Amazon sites.

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In another set of trouble for top US technology giant , has sued the tech major over violating the state's antitrust and unfair competition laws by stifling competition and engaging in practices that push sellers to maintain higher prices on products on other sites.

According to the 84-page lawsuit filed in San Francisco Superior Court, California Attorney General Rob Bonta's office said Amazon used contract provisions to effectively bar third-party sellers and wholesale suppliers from offering lower prices for products on non-Amazon sites, including on their own websites.

That, in turn, harms the ability of other retailers to compete.

The suit maintains merchants that do not comply with the policy could have their products stripped from prominent listings on Amazon and face other sanctions such as suspensions or terminations of their accounts.

It alleges Amazon's policy essentially forces merchants to list higher prices on other sites, helping the retail giant maintain its e-commerce dominance.

Among other things, the California lawsuit seeks to stop Amazon from entering into contracts with sellers that harm price competition.

It also seeks a court order to compel Amazon to pay damages to the state for increased prices. State officials did not say how much money they are seeking.

Seattle-based Amazon controls roughly 38% of online sales in the U.S., more than that of , , Apple, Best Buy and Target combined, according to the research firm Insider Intelligence.

About 2 million sellers list their products on Amazon's third-party marketplace, accounting for 58% of the company's retail sales.

The tech industry's allies quickly slammed the lawsuit.

Adam Kovacevich, CEO of the industry trade group Chamber of Progress, which receives from Amazon and other tech companies, said the case would force Amazon to raise prices.

Lawmakers on Capitol Hill have been pushing bipartisan legislation aiming to limit Amazon and other Big Tech companies, including Apple, Meta and Google, from favoring their own products and services over rivals.

The bill has cleared key committees but has languished in Congress for months amid intense pushback from the companies.

Meanwhile, regulators have also been looking into Amazon's business practices and deals.

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Tech Observer Desk
Tech Observer Desk
Tech Observer Desk at TechObserver.in is a team of technology reporters led by a senior editor who brings latest updates and developments from the world of technology.
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