California AG says Amazon strong-armed competitors into driving up prices

SAN FRANCISCO (CN) — Newly unredacted court documents show Amazon forced competing retailers, including Target, Walmart and Home Depot, to artificially increase the prices of everyday goods, California Attorney General Rob Bonta claimed in a Monday announcement.

The new evidence — detailed in a largely unredacted motion for preliminary injunction filed as part of a 2022 antitrust case against Amazon — includes several examples of Amazon demanding vendors “fix” or “raise” product prices on other retailers’ websites. If the vendors did not comply, they reportedly faced consequences ranging from advertising and promotion restrictions to the removal of their products from Amazon.

“Amazon has strong-armed vendors into raising prices elsewhere or pulling products from competing retailers altogether so that Amazon can protect its profit margins. That’s not competition, it’s price fixing, and under California law, it’s illegal,” Bonta said in a press conference announcing the release of the unredacted documents.

Amazon is the country’s dominant online retail store, with more than 160 million Prime members nationwide and around 25 million customers in California. According to one survey, 96% of all Prime members said that they are more likely to buy products from Amazon than any other online store, and 74% of all consumers go to Amazon to buy a specific product.

However, in required contracts to sell on the website, merchants must agree not to offer lower prices elsewhere — including competing sites like Walmart, Target, eBay and sometimes on their own websites — and accept drastic penalties like loss of the “Buy Box” on Amazon or to “compensate” Amazon if other online stores do lower their prices. Merchants that do not comply face sanctions such as less prominent listings and even the possibility of termination or suspension of their seller accounts, California claims.

The court redacted the details of Amazon’s purported schemes in the original motion for preliminary injunction filed in February, including the names of vendors and retailers the company worked with and what products they targeted. However, the newly unredacted copy reveals specific examples of Amazon’s reported unlawful conduct.

In one instance, Amazon reportedly sent clothing retailer Levi’s links to two “styles of concern” because they were listed for a lower price on Walmart.com. The next day, Levi’s reported back that the prices on the products had increased, telling Amazon that “Walmart partnered with [us] to update this as a test for the best interest of the marketplace.”

Amazon also reportedly worked with vendor GlobalOne to have pet retailer Chewy increase the price of pet treats after Amazon increased the list price.

According to an email from GlobalOne, Amazon would “artificially take [Canine Naturals] retails up … to get Chewy to follow.” After the plan was put in place, GlobalOne confirmed the “ones that went up on Amazon immediately went up on Chewy,” followed by a smiley face emoji.

California also says Amazon further threatened to stop selling products from All the Rages, a home decor vendor at Walmart and Home Depot, and Armen Living, a furniture vendor, if they did not increase the prices for products sold at the competing retailers.

In one communication, Armen Living promised to “look further into the potential offenders and put them on pause” and said that if the “problematic retail does not fix by the end of the week, we will discontinue [these products] from your problematic competition to ensure that Amazon can return to a healthy state with these items.”

The unredacted motion additionally included several examples of Amazon’s purported price fixing, including the company working with apparel vendor Hanes to increase prices at Target and Walmart, as well as plant fertilizer vendor Agrothive to raise prices at Home Depot.

“These examples are not outliers,” Bonta said at Monday’s press conference. “They’re part of a widespread scheme spanning years and spanning product categories.”

Bonta claims that Amazon’s price parity agreements have expanded and entrenched Amazon’s market power as an online retail store and resulted in pricing above competitive levels in California, in violation of the state’s Unfair Competition Law and the Cartwright Act.

He is asking the court to prohibit Amazon from these practices while the case is being litigated, as well as appoint an independent monitor to make sure Amazon complies with the order.

“We’re not asking Amazon to change its business model,” he said. We’re asking it to follow the law.”

A hearing on the motion for preliminary injunction is scheduled for July 23. The case is set to go to trial in January 2027.

Representatives for Amazon did not immediately respond to a request for comment.

The case, filed in San Francisco Superior Court, stems from an investigation taking place over more than two years. On April 15, Judge Ethan P. Schulman denied Amazon’s motion for summary judgment of its seventh crossclaim that the company’s practices of determining whether a third-party seller’s or vendor’s offer on its platform is eligible to be selected as a “Featured Offer” are legal.

Follow @mhattridge_