Amazon will pay $2.25 million under a consent decree with Washington state Attorney General Bob Ferguson to settle claims that one of the company’s former programs for third-party sellers constituted illegal price-fixing.
The case involves a since-discontinued program called Sold by Amazon (SBA), in which selected third-party sellers were invited to give Amazon control over the prices of specific products. In exchange, Amazon established a “Minimum Gross Proceed” that guaranteed the seller would make at least that much even if the price was lower.
Prices were then “fixed, raised, maintained, or stabilized at artificially high levels through price increases, price floors, and/or discount prevention, requiring consumers to pay more for those products than they otherwise would have in a competitive market but for SBA,” the AG alleged in a suit made public Wednesday.
Amazon admitted no wrongdoing in the consent decree settling the case.
“This was a small program to provide another tool to help sellers offer lower prices, much like similar programs common among other retailers, that has since been discontinued,” an Amazon spokesperson said in a statement. “While we strongly believe the program was legal, we’re glad to have this matter resolved.”
In fact, the company still says it believes the AG’s interpretation of the price implications was wrong.
“This was a program where Amazon was the retailer and purchased products from suppliers after receiving a customer order, as many retailers do; it was designed to and did enable Amazon to provide low prices for customers,” the Amazon spokesperson said.
The program “was discontinued in 2020 for business reasons unrelated to the AG’s investigation,” the spokesperson said.
AMZScout, a company that offers services for Amazon sellers, conveyed the opposite of the attorney general’s allegations in an article explaining the program, warning sellers, “Because [Amazon’s] top priority is giving customers the lowest possible prices, you may find yourself earning very low margins per sale.”
After launching SBA in 2018, the complaint says, Amazon suspended the program in June 2020, after the AG opened an investigation, but says it was done in a manner that the program could be “efficiently and effectively resumed.” The consent decree prevents the company from relaunching the program or any similar one under another name.
It’s one in a series of cases involving Amazon’s third-party marketplace. A suit by Washington D.C. Attorney General Karl Racine alleges that the company illegally manipulates the e-commerce market to its advantage by penalizing third-party sellers that offer products at lower prices on other platforms.
Amazon paid $2.5 million in a November settlement with Ferguson’s office over third-party pesticide sales.
The Washington state AG also filed suit earlier this week against Google, alleging that the search giant uses “deceptive and unfair practices” to track and collect location data.
