California filed antitrust charges against Amazon on Wednesday, alleging the online retailer was able to boost its prices by forcing sellers to sign contracts that stifle fair competition.
Amazon merchants are "coerced" into agreeing to terms that severely penalize them if they offer goods for less on other sites like eBay or Target, California Attorney General Rob Bonta alleged in a statement. Bonta said it's a violation of the state's Unfair Competition Law and Cartwright Act.
"For years, California consumers have paid more for their online purchases because of Amazon's anticompetitive contracting practices," he said. "With other e-commerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases. This perpetuates Amazon's market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California."
Prices would be lower, Bonta said, "if market forces were left unconstrained."
The company has 160 million Prime members in the US and around 25 million customers in California alone, according to the California attorney general's office. In addition, Amazon has numerous offices in Southern California, committing to leasing nearly 440,000 square feet of commercial space in Santa Monica, Irvine and San Diego.
A 2021 antitrust case against Amazon was dismissed, but that ruling is being appealed. A class action suit alleging the company is violating the Sherman Act and other antitrust laws is before a federal judge in Washington state.
In a statement shared with CNET, an Amazon spokesperson said Bonta "has it exactly backward."
"Amazon takes pride in the fact that we offer low prices across the broadest selection and, like any store, we reserve the right not to highlight offers to customers that are not priced competitively," the representative said. The California suit "would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law."