Amazon’s Seattle campus. (GeekWire Photo / Kurt Schlosser)

A trio of proposed class-action lawsuits in the U.S. and Canada accuse Amazon of abusing its market dominance to fix prices.

The lawsuits, filed on behalf of consumers in both countries, claim Amazon violates competition laws by penalizing third-party sellers that offer their products at lower prices on other platforms.

The complaints won’t have real teeth unless certified as class-action lawsuits. However, they reflect growing scrutiny of Amazon from regulators and sellers who assert that the company uses its power unfairly to gain a competitive edge.

The plaintiffs are seeking billions of dollars in damages and injunctive relief. Amazon disclosed the lawsuits in its latest 10Q filing with the Securities & Exchange Commission, informing investors about the complaints brought in the U.S. District Court for the Western District of Washington, the Superior Court for Quebec – Division of Montreal, and the Federal Court of Canada.

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“We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters,” Amazon said in the filing. The company  declined to comment further on the lawsuits.

While Amazon commands more than one-third of US e-commerce sales, the company has contended in the past that the relevant market for purposes of regulatory oversight should also include physical retail. By that measure, its market share is in the low single digits.

The U.S. lawsuit was filed in federal court in Amazon’s hometown of Seattle. It hinges on a now-defunct Amazon policy that prevented third-party sellers from offering their products on other sites or channels at a lower price, under the company’s Services Business Solutions Agreement.

Amazon withdrew that provision last year under threat of an FTC investigation, but the company continues to enforce it through penalties on sellers who offer lower prices outside the platform, according to the complaint. Under its “fair pricing” policy, Amazon can remove the coveted “Buy Box,” suspend shipping options, or in some cases terminate selling privileges, the lawsuit says.

“It costs less to sell on eBay or the sellers’ own websites, but because of Amazon’s anticompetitive price policies, its third-party sellers are prevented from lowering their prices to online customers reached outside the Amazon.com platform,” the complaint says. “By contractually enforcing a price policy that preempts lower prices offered through any competing retail e-commerce channel — even when sellers retain the same level of profit at the lower price, Amazon engages in a pricing scheme that broadly and anticompetively impacts virtually all products offered for sale in the U.S. retail e-commerce market.”

The U.S. lawsuit claims Amazon is abusing its “monopoly power” in violation of the Sherman Antitrust Act. Were it not for the terms Amazon requires, prices for consumers would be lower in the e-commerce market, the plaintiffs claim.

The specifics of the allegations are significant because, for the past few decades, antitrust enforcement in the United States has hinged on whether consumers ultimately pay higher prices as a result of marketplace dominance. That has been tricky to prove in the digital age, when companies like Amazon use their power to keep prices low and others, like Facebook and Google, use targeted ad-based business models to avoid charging consumers for their services at all.

Jeff Bezos at Museum of Flight
Amazon CEO Jeff Bezos. (GeekWire Photo / Kevin Lisota)

Despite those headwinds, Amazon and several of its tech industry peers are under scrutiny from the U.S. House subcommittee on antitrust and federal regulators over competitive issues. House lawmakers have asked Amazon CEO Jeff Bezos to testify on the matter, but the company appears reluctant to comply.

“It fits into the broader scrutiny Amazon is under for unlawful and unfair business practices, violating the antitrust and other laws, which have harmed U.S. consumers,” said Steve Berman, the attorney representing the plaintiffs. Berman brought a separate proposed class-action lawsuit against Amazon in April, accusing the company of price gouging during the pandemic.

The lawsuit filed in the Federal Court of Canada makes similar allegations, claiming Amazon engaged in “two separate anticompetitive agreements to fix retail e-commerce prices.” The first is the third-party seller price agreements targeted in the U.S. lawsuit. The Canadian case also claims that the fees Amazon charges sellers to use its marketplace and services artificially inflate prices on Amazon.com and other retail sites.

“These anticompetitive agreements permit Amazon to shelter its online retail business from price competition,” the lawsuit says. “By limiting price competition through the anticompetitive agreements, Amazon has maintained an illegal competitive advantage that has enabled it and the third-party sellers to sell products to consumers at higher than competitive prices.”

Whether or not the complaints are certified as class action lawsuits, they mark a new legal tactic for Amazon adversaries who believe the company has become too powerful. The strategy could also be a harbinger of things to come. Microsoft fielded a bevy of proposed class-action lawsuits in the 1990s, claiming antitrust violations in states across the U.S., after the federal government took up the issue.

Amazon Lawsuit by GeekWire on Scribd

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