Hannah Brem | U. Pittsburgh School of Law, US
Washington state Attorney General Bob Ferguson Thursday announced that Amazon will pay $2.25 million to his office and shut down its “Sold by Amazon” third-party seller program after a lengthy price-fixing investigation by his office’s Antitrust Division.
Ferguson’s office filed a resolution in the King County Superior Court. Because a consent decree is a court order agreed to by all parties after settlement negotiations, Amazon is bound to the terms of the settlement. The multi-million dollar payment from Amazon will fund further investigations by the Antitrust Division.
Currently, over half of all Amazon sales are through third-party sellers. The “Sold by Amazon” program allowed Amazon to increase its profits on such sales. Amazon negotiated with sellers to provide them with a minimum profit for sales while pocketing any additional profit. However, Amazon’s algorithm automatically matched low prices from other retailers.
The AG’s office described the price-fixing allegations, saying:
Prices for the vast majority of the remaining products enrolled in the “Sold by Amazon” program stabilized at artificially high levels. This is because Amazon programmed its pricing algorithm to maintain the seller’s pre-enrollment price as the price floor. This meant participating sellers had limited, if any, ability to lower the price of their products without withdrawing the product’s enrollment in the Sold by Amazon program . . . Many sellers remained stuck with an artificially high price for their products while Amazon was able to maximize its own profits.
Sellers in the program were unable to compete with external prices and Amazon’s own prices. They experienced stagnated sales while still paying Amazon fees for things like storage. Ferguson commented, “Today’s action promotes product innovation and consumer choice, and makes the market more competitive for sellers in Washington state and across the country.”
Amazon has faced additional antitrust cases in the European Union, the Southern District of New York, and the District of Columbia.
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