Amazon faces anti-trust lawsuit in US capital for unfair trade practices

Plaintiff is accusing the company of suppressing competition from other online retail sales platforms

Lawsuit from the Washington, DC, attorney general's office alleges that Amazon's control of 50 to 70 percent of US e-commerce sales results in higher prices. AFP

E-commerce company Amazon is being sued by the office of the Attorney General of Washington, DC, for reportedly using its dominant market position to stifle competition from other platforms, such as eBay, Walmart and even the websites of third-party sellers.

The company's anti-competitive practices have raised prices for  consumers, Karl Racine, the attorney general for Washington, DC, said.

“Amazon’s online retail sales platform benefits from, and is protected by, Amazon’s anti-competitive business practices,” the complaint said.

“Far from enabling consumers to obtain the best products at the lowest prices, Amazon instead causes prices across the entire online retail sales market to be artificially inflated, both for products sold on Amazon’s online retail sales platform and on its competitors’ online retail sales platforms.”

Amazon, the world’s largest online retailer, controls between 50 per cent and 70 per cent of all online retail sales in the US. It holds an even larger market share of multi-seller online retail platforms including Walmart and eBay, the lawsuit said.

The third-party sellers were forced to incorporate Amazon’s high fees and costs into their product prices not only when selling on the Seattle company's platform, but also when selling across the entire online retail sales market, according to the lawsuit.

Amazon's first-quarter revenue this year rose 44 per cent to $108.5 billion as the Covid-19 pandemic boosted online shopping globally.

“Amazon has used its dominant position in the online retail market to win at all costs. It maximises its profits at the expense of third-party sellers and consumers forced to pay artificially high prices, while harming competition and innovation and illegally tilting the playing field,” Mr Racine tweeted on Tuesday.

“We filed this anti-trust lawsuit to put an end to Amazon’s illegal control of prices across the online retail market. We need a fair online marketplace that expands options available to district residents and promotes competition, innovation and choice."

Products sold on Amazon’s online retail sales platform fall into two categories. One is the resale of products from other vendors and the other is allowing third parties to sell through its platform.

There are more than two million sellers in the US who use Amazon’s online platform to sell their products.

The anti-competitive impact of the company’s conduct is compounded by a complex scheme of fees and extra charges, sometimes equalling up to 40 per cent of the total product price, which Amazon imposes on third-party sellers on its platform, the complaint said.