California is suing Amazon.com Inc., claiming the e-commerce giant’s policies for those who sell on its platform have blocked competition and driven up prices for consumers, state Attorney General Rob Bonta announced Wednesday.
Bonta said that by requiring third-party sellers on its website not to sell their wares for lower prices elsewhere, Amazon AMZN, +0.33% is violating California’s Unfair Competition Law and the Cartwright Act, which bars agreements that restrain trade.
“For years, California consumers have paid more for their online purchases because of Amazon’s anticompetitive contracting practices,” Bonta said in a statement.
“With other e-commerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases,” he added. “This perpetuates Amazon’s market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California.”
At a news conference Wednesday, Bonta said his office has been working on the case for the past 2½ years, and that the lawsuit is supported by interviews with sellers as well as evidence and data.
“In this economic climate, we need to do all we can to help consumers who are paying artificially inflated prices,” he said.
The lawsuit, filed in San Francisco Superior Court, asks the court to prohibit Amazon from continuing to engage in anticompetitive conduct and to appoint a monitor to ensure compliance, and seeks damages as well as civil penalties of $2,500 for each violation of the state’s unfair competition law — which his office said could be a significant number. The attorney general’s office estimates that the company has at least 25 million customers in California.
“The collective magnitude of harm here is very far-reaching,” Bonta said at the news conference. “We’re sending a message to other companies: If you use your power to harm Californians, we’ll see you in court.”
Amazon has faced similar lawsuits over its third-party merchant policy elsewhere. Earlier this year, an antitrust lawsuit by the District of Columbia was dismissed but is under appeal, while another lawsuit in Washington state was allowed to proceed. California has its own Unfair Competition Law that was cited by a judge previously in the landmark Epic Games Inc. v. Apple Inc. AAPL, -0.02% antitrust suit in the only beneficial ruling for “Fortnite” maker Epic in that case; Apple has appealed that verdict and the case is ongoing.
Bonta has cited the state’s unfair competition law in filing a brief in support of fair competition in the legal battle between Apple and Epic, though the brief stressed that the state was not taking a side in the fight.
Amazon did not immediately return a request for comment Wednesday.
Amazon shares were trading less than 1% higher Wednesday afternoon. The stock has declined 23.3% so far this year, as the S&P 500 index SPX, -0.33% has declined 17.5%.