Amazon pressured corporations to hike costs on rivals | UNW

Amazon pressured major brands like Levi Strauss & Co and Hanes to inflate prices of listings on rival online marketplaces as part of wide-ranging price-fixing scheme, according to California Attorney General Rob Bonta.

The newly unsealed documents released on Monday are part of a 2022 antitrust lawsuit alleging Amazon stifled competition and increased the prices that consumers pay across the internet. The complaint zeroes in on Amazon’s agreements with its millions of vendors, which Bonta says “keep prices artificially high” on competing platforms.

Vendors are compelled to agree to Amazon’s demands because of its dominant position in online retail, Bonta argued.

Amazon has previously disputed Bonta’s claims. An Amazon spokesperson told CNBC in a statement that it will respond in court “at the appropriate time.”

“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 spokesperson said in a statement.

The documents released Monday include 2022 communications between Amazon and undergarments maker Hanes, where it sent the vendor links to listings on Target and Walmart‘s websites showing lower prices than those on Amazon.

Hanes confirmed that it “reached out to Target and Walmart to have the prices increased,” the filing states.

In another case, Amazon alerted Allergan that it temporarily suppressed listings for its eye drops once it found they were being sold for less elsewhere. The medical products company replied saying, “Walmart got their price back up” to $16.99 and asked Amazon to unsuppress the product. Amazon agreed, according to the filing.

Amazon also allegedly pressed Levi’s to ask Walmart to hike the price of its khaki pants, which were being offered for less than Amazon’s listings. Walmart raised its prices, the filing states.

Representatives from Hanes, Levi’s and AbbVie-owned Allergan didn’t respond to requests for comment.

Bonta’s office has asked a San Francisco Superior Court judge to prevent Amazon from engaging in the alleged price-fixing practices while the lawsuit proceeds. The office has also requested the court to appoint an independent monitor to oversee Amazon’s compliance. The case is slated to go to trial in 2027.

“Amazon has strong-armed vendors into raising prices elsewhere or pulling products from competing retailers altogether so that Amazon can protect its profit margins,” Bonta said Monday on a call with reporters. “That’s not competition. It’s price fixing, and under California law, it’s illegal.”

Amazon controls as much as 50% of the U.S. e-commerce market, based on various estimates. The company has long argued that its pricing policies enable it to keep prices low for consumers.

Several antitrust complaints take aim at its pricing mechanisms.

The Federal Trade Commission and 17 states sued Amazon in 2023, accusing it of wielding its monopoly power to squeeze merchants, resulting in higher prices on rival websites. Washington, D.C.’s attorney general sued Amazon in 2021 over its pricing polices, while European regulators have also scrutinized the issue.

Third-party sellers on Amazon, which account for more than 60% of goods sold by the retailer, have also argued that the company uses pricing algorithms to prevent it from offering lower prices elsewhere on the web. They say that doing so puts them at risk of losing the “Buy Box,” or the portion of an Amazon listing where shoppers click “Buy Now” or “Add to Cart.”

Analysts estimate that about 80% of Amazon sales flow through the Buy Box.

Bonta said his office released the new filings Monday to show how Amazon “coordinates” with vendors and major retailers, including Target, Walmart, Chewy, Best Buy and Home Depot, to raise prices across the market.

“We’re not speaking generally anymore,” Bonta told reporters. “We’re calling out the conduct and the companies behind it.”