Washington DC Attorney General Karl Racine has recently announced that he is going to sue Amazon on antitrust grounds. He is accusing the online retail giant of unfairly increasing high prices and stifling competition. Racine believes Amazon has been "illegally abusing and maintaining its monopoly power by controlling prices across the online retail market" for years.
Moreover, the main reason for the trial was the so-called price agreements that the company imposes on suppliers. "Third-party sellers have to agree that they will not offer their products anywhere else online, including their own websites, for a lower price than on Amazon," Racine said. This is why this vile practice should be stopped and the retailer should be fined.
Amazon’s pricing agreements were also subject to scrutiny in the House Judiciary Subcommittee last fall. Back then, Lawmakers unanimously agreed that Amazon uses its dominant position in e-commerce as leverage with third-party sellers to make them adhere to "most favored nation" clauses. "We know that those clauses are disfavored in law, particularly when a company like Amazon has monopoly power. And we know that in the past, Amazon has been criticized for those types of clauses," Racine pinpointed.
Notably, Amazon quickly lifted the previously existing ban on setting lower prices on other websites, but instead, it introduced new terms of cooperation that imply serious sanctions for dumping.
Amazon is not the only company that faced antitrust lawsuits. The federal and state enforcers filed antitrust lawsuits against other tech giants, including Google and Facebook. Over the past fiscal year, Amazon made a net profit of $26.9 billion, setting a historic record. This exceeded the profit for the last three years combined.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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