American e-commerce giant Amazon coerced prominent brands, including Levi’s Strauss and Hanes, into an alleged price-fixing scheme wherein they agreed to raise prices of their goods on competing retail websites operated by Walmart, Target Corp, Home Depot, etc., according to court documents seen by Bloomberg.
The filing is part of California Attorney General Rob Bonta’s 2022 antitrust lawsuit, which alleged that Amazon artificially inflated the cost of products to shield its profit margins.
The lawsuit, scheduled for trial in January next year, is one of the several antitrust cases against Amazon. Interestingly, the retail giant captures about 40 cents of every dollar spent online in the US.
Increasing prices for rival retailers
“Time and again, across years and product categories, Amazon reaches out to its vendors and instructs them to ‘fix’ retail prices on competitors’ websites, threatening dire consequences if vendors do not comply,” observed an unredacted court filing made public on Monday.
According to the filing, there were more than 15 instances where Amazon employees contacted suppliers when they saw lower prices on competing websites, including Best Buy and Newegg Commerce. It details Amazon’s campaign to ensure it had the best prices on a wide range of products, including Levi’s khaki pants, Hanes apparel, bar stools, fertilizer, eye drops, portable generators and guitar audio equipment.
“Amazon provides exact details of its competitors’ prices and directly asks vendors to ‘look into’ getting the competitors to increase their prices,” the complaint stated. Although there is no evidence of direct communication between Amazon and competing retailers, it did contact product suppliers and brands, which said rivals such as Walmart and Home Depot had agreed to update the prices of their products.
Amazon responds
In response to the court filing, Amazon spokesperson Mark Blafkin said: “The Attorney General’s motion is a transparent attempt to distract from the weakness of its case, coming more than three years after filing its complaint and based on supposedly ‘new’ evidence it has had for years.”
The antitrust case is being closely watched as it may lead to a forced breakup of Amazon’s retail business. The unsealed California motion stated that the evidence reveals conduct egregious enough for a court to temporarily block the behaviour pending the outcome of the trial. The next hearing is scheduled for July at the state’s request.
