California accuses Amazon of price-fixing, says it bullies vendors and competitors to raise prices
The company denies the allegations and says it is "proud" of its low prices
Amazon is artificially driving up prices for American consumers through an illegal price-fixing scheme, California charges. State Attorney General Rob Bonta today announced the public release of evidence that he supports the allegation.
In February, Bonta filed a request for a preliminary injunction asking the San Francisco Superior Court to halt Amazon’s allegedly illegal conduct while California’s lawsuit proceeds, and today he secured a largely unredacted copy of that filing for the public.
Amazon has long maintained that it offers customers the lowest prices but the $2.66 trillion empire has faced increased scrutiny from regulators, who have argued that the company’s policies harmed online competition and inflated consumer costs.
The Federal Trade Commission and 17 states sued Amazon in 2023, accusing the company of illegally maintaining a monopoly in online retail by squeezing merchants who sell on its site and prioritizing its own products, The New York Times noted. Those actions resulted in “artificially higher prices,” according to the government’s suit, which is expected to go to trial next year.
In September, Amazon agreed to pay up to $2.5 billion to settle an FTC lawsuit that accused if of making it difficult for consumers to cancel its Prime subscription service. The company did not admit wrongdoing in the settlement.
The unredacted filing released today paints what Bonta called “a clear and shocking picture” of specific interactions in which Amazon, vendors, and competing retailers like Target, Walmart, Chewy, Best Buy, Home Depot, and others agree to increase retail prices across their platforms, all so Amazon can maintain its profit margins at the expense of consumers.
“The evidence we’ve uncovered is clear as day: Amazon is working to make your life more unaffordable. The company is price fixing, colluding with vendors and other retailers to raise costs for Americans beyond what the market requires — beyond what is fair,” said Bonta.
“Amid a crisis of affordability, Amazon is illegally working to rake in profits by making sure consumers have nowhere else to turn to for lower prices. We’ll see them in court,” Bonta said.
Amazon “proud of … low prices”
In a statement, Amazon called Bonta’s filing a “transparent attempt to distract from the weakness of [California’s] case, coming more than three years after filing its complaint and based on supposedly ‘new’ evidence it has had for years.”
“Amazon is consistently identified as America’s lowest-priced online retailer, and we’re proud of the low prices customers find when shopping in our store,” spokesman Mark Blafkin said.
Vendors bullied to jack up prices, state alleges
For years, Amazon has reached out to its vendors and instructed them to increase retail prices on competitors’ websites, threatening dire consequences if vendors do not comply, Bonta alleged. Vendors, bullied by Amazon’s overwhelming bargaining leverage and fearing punishment, agree to raise prices on competitors’ websites, or to remove products from competing websites altogether, he said.
This price-fixing scheme typically begins with Amazon demanding that vendors “fix,” “correct,” “increase,” “raise,” or “look into” the prices of products on other retailers’ websites, California’s suit charges. These directives to vendors are backed by the threat of significant penalties for failure to comply — ranging from advertising and promotion restrictions, to demands for financial compensation, to the removal of vendors’ products from Amazon, California charges.
“Three illegal schemes”
Amazon uses three different illegal schemes, all of which result in increased prices for consumers, Bonta alleges.
Amazon or its competitor, through their common vendor, will agree to increase the retail price or make a product temporarily unavailable, so that the other retailer can match the increased market price, increasing the price for consumers.
A competitor offering a cheaper price on a product will increase its retail price at Amazon’s request (a request made through the vendor), so that Amazon can then match that increased retail price, thereby increasing the price for consumers.
The vendor removes a product from a competing retailer that is offering a lower price than Amazon, so that the lower price is no longer available in the market and Amazon then raises its retail price, resulting in a higher price for consumers.
What happens next?
As part of the motion for preliminary injunction, originally filed in February, Attorney General Bonta asks the court to stop Amazon’s unlawful conduct while this case proceeds, including: engaging in explicit price fixing with its vendors and its competitors; communicating with vendors about other retailers’ pricing; and coercing its vendors to serve as the go-between with its competitors by demanding money to make Amazon whole for price matching a lower-priced retailer.
The hearing on the preliminary injunction motion is set for July 23. This case is scheduled to go to trial in January 2027.