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WASHINGTON (CN) — Amazon must once again face an antitrust lawsuit accusing the retail giant of wrongfully raising prices, a D.C. Court of Appeals panel ruled on Thursday.
The lawsuit was the first antitrust case to target Amazon for allegedly using its position as the largest online retailer to maximize profits at the expense of its customers. Brought by then-D.C. Attorney General Karl Racine in May 2021, a trial judge dismissed it in 2022.
On Thursday, though, a D.C. appeals panel reversed course, reviving the case. Senior Judge John Fisher and Associate judges Corinne Beckwith and Joshua Deahl — a George W. Bush, Barack Obama and Donald Trump appointee, respectively — ruled the case should be remanded to the D.C. Superior Court for further proceedings.
In its initial lawsuit, D.C. argued that Amazon used restrictive contracts to fix prices for products across all online retailing platforms. It did so, authorities argued, by creating a price floor that incorporated the company’s mandatory fees and prevented sellers from offering lower prices elsewhere.
The contracts were known as “minimum margin agreements.” If a seller violated the agreement by offering lower prices on a competing marketplace, they would have to pay Amazon for any corresponding loss in profit margin.
In their Thursday ruling, the three-judge panel found that the attorney general’s allegations were sufficient to suggest the agreements created anticompetitive effects. Thus, the judges said, the lower court should have thrown out Amazon’s motion to dismiss.
“By failing to accept the allegations in the complaint as true, the trial court set too high a bar for the District’s complaint,” Beckwith wrote in the panel’s opinion.
In their lawsuit, D.C. authorities also targeted Amazon’s so-called “fair-pricing policy," which sanctions third-party sellers whose prices on Amazon are either higher than previous listing prices or higher than those on another marketplace.
They argued this policy caused higher commissions and fees to third-party sellers — as well as lower profits than would be seen in a competitive market. They also argued the policy was an “effectively identical substitute” to a previous and similarly controversial provision in Amazon seller contracts, which the company removed in 2019 following ire from Congress and government regulators.
In a statement Thursday, current D.C. Attorney General Brian Schwalb praised the panel’s decision.
“Now, our case will move forward," Schwalb said. “We will continue fighting to stop Amazon’s unfair and unlawful practices that have raised prices for District consumers and stifled innovation and choice across online retail.”
Amazon spokesperson Tim Doyle in turn expressed disappointment with the decision, defending the company’s conduct in an emailed statement to Courthouse News.
“We disagree with the District of Columbia’s allegations and look forward to presenting facts in court that demonstrate how good these policies are for consumers,” Doyle said. “Just like any store owner who wouldn’t want to promote a bad deal to their customers, we don’t highlight or promote offers that are not competitively priced. It’s part of our commitment to featuring low prices to earn and maintain customer trust.”
Moving to dismiss the case and thwart the appeal, Amazon had argued that D.C. failed to show any anticompetitive effects from the agreement.
The company instead characterized the challenged agreements as prohibitions against discrimination and price gouging. D.C.’s arguments to the contrary, Amazon lawyers argued, were purely speculative.
Besides the District of Columbia, the feds have also gotten involved in the suit.
After the trial judge dismissed the case, the Justice Department in April 2022 filed a statement of interest, arguing that the accused conduct in D.C.’s suit also violated federal antitrust laws, including the Sherman Antitrust Act. The DOJ argued the lower court had applied an incorrect analysis in determining whether “concerted actions” by Amazon unreasonably restrained trade.
The lower court judge had incorrectly merged two distinct questions — whether there was a concerted action by Amazon, and whether that action restrained trade — the DOJ argued. The agency noted that the judge also required the District to exclude explanations of restraints.
“If left uncorrected, the court’s ruling could jeopardize the enforcement of antitrust law by improperly raising the bar on plaintiffs challenging anticompetitive contractual restrains in the District of Columbia,” Justice Department attorney Yixi Cheng warned in the filing.
Since D.C. first filed suit, Amazon has taken heat from state and federal regulators. In September 2023, the Federal Trade Commission — joined by 17 state attorneys general — also sued the company over what they said were anticompetitive strategies. That case will likely go to trial in October 2026, following a ruling from a federal judge in Washington State.
Like the case from D.C., the FTC took aim at what regulators said were measures to prevent Amazon sellers from offering lower prices elsewhere. Sellers who did so were placed lower in Amazon’s search results, the agency argued.
Additionally, the agency also highlighted an Amazon policy requiring sellers to use the company’s fulfillment services if they wanted to obtain eligibility for “Prime,” the company’s content and rapid-delivery subscription service. That policy made it more expensive for sellers to offer their products elsewhere, regulators argued, thus amounting to “unlawful coercion.”
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