NEW YORK — California is suing Amazon, accusing the company of violating the state’s antitrust laws by stifling competition and engaging in practices that push sellers to charge higher prices for products on other sites.
The An 84-page case filed Wednesday in San Francisco Superior Court, echoes another complaint filed last year by the District of Columbia that was dismissed by a district judge earlier this year and is now going through an appeals process.
But officials in California believe they won’t face a similar fate, in part because of information gathered during a more than two-year investigation that included subpoenas and interviews with sellers, Amazon competitors, and current and former company employees.
In the lawsuit, California Attorney General Rob Bonta’s office said Amazon used contractual provisions to effectively bar sellers from offering lower prices for products on non-Amazon sites, including sellers’ own websites. This in turn hurts other retailers’ ability to compete.
The suit maintains that merchants who do not comply with the policy could have their products removed from prominent listings on Amazon and face other penalties, such as suspension or termination of their accounts. It claims Amazon’s policy essentially forces merchants to post higher prices on other sites, helping the retail giant maintain its e-commerce dominance.
Among other things, the California lawsuit seeks to stop Amazon from entering into contracts with sellers that harm price competition. He is also seeking a court order to force Amazon to pay compensation to the state for increased prices. State officials did not say how much money they are seeking.
Seattle-based Amazon controls roughly 38 percent of online sales in the U.S., more than Walmart, eBay, Apple, Best Buy and Target combined, according to research firm Insider Intelligence. About 2 million sellers list their products on Amazon’s third-party marketplace, accounting for 58% of the company’s retail sales.
“Amazon forces merchants into agreements that keep prices artificially high, knowing full well they can’t afford to say no,” Bonta said in a statement.
Amazon has said in the past that sellers set their own prices on the platform. It also said it had the right to avoid highlighting products that weren’t competitively priced.
Despite these protections, Amazon’s market power has come under scrutiny from lawmakers and advocacy groups calling for stronger antitrust regulations. Earlier this year, lawmakers called on the Justice Department to investigate whether the company was collecting data about sellers to develop competing products and offer them more prominently on its site. Critics also panned increase in fees imposed on sellers, making it difficult for traders to enter the market.
Lawmakers on Capitol Hill have been pushing for bipartisan legislation aimed at curbing Amazon and other big tech companies, including Apple, Meta and Google, from favoring their own products and services over competitors. The bill has cleared key committees but has stalled in Congress for months amid intense pushback from companies.
Meanwhile, regulators are also looking into Amazon’s business practices and deals. In July, the company offered settlement discounts two antitrust investigations in the European Union, including a promise to apply equal treatment to all sellers when ranking product listings in the site’s “buy box,” a coveted spot that makes items more visible to shoppers.
In the US it is the Federal Trade Commission investigation into the $3.9 billion acquisition of Amazon of healthcare major One Medical, as well as the sign-up and cancellation practices of Amazon Prime, the company’s paid subscription service that offers deals and faster shipping.
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