Coercive Price Fixing
By Philip
Mattera, director of the Corporate
Research Project of Good Jobs First for the
Its Prime subscription system was designed to make customers
focus on the benefits of free shipping and overlook the fact that the prices of
the products were not much of a bargain.
Now the giant e-retailer is facing allegations that it not
only abandoned the low-cost approach but actually conspired to raise the prices
charged on its own platform as well as those of its competitors.
California Attorney General Rob Bonta brought a price-fixing lawsuit against Amazon in February and has just provided new details of the alleged conspiracy in a motion filed in state court in San Francisco.
The
document claims that when a competing platform is offering a product at a price
lower than it is charging, Amazon demands that the supplier intervene to get
that price increased: “Vendors, cowed by Amazon’s overwhelming bargaining
leverage and fearing punishment, comply—agreeing to raise prices on competitors’
websites (often with the awareness and cooperation of the competing retailer)
or to remove products from competing websites altogether. The scheme is neither
subtle nor complex. It is price fixing, and it should be immediately enjoined.”
The pressure exerted by Amazon is said to be a part of a
system called Can’t Realize a Profit, or CRaP, in which it cuts off orders from
suppliers that don’t comply with the company’s demands.
What is notable about the California AG’s motion is that it
include details on specific vendors that were said to have gotten caught up in
the price fixing. For example, it quotes an email from GlobalOne Pet Products,
a producer of premium pet treats, to the big pet supplies website Chewy urging
it to coordinate a price increase with Amazon.







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