California is suing Amazon, accusing it of inflating prices and crushing competition

• California is suing Amazon accusing it of anticompetitive conduct.
• The lawsuit says Amazon coerces third-party sellers into agreeing not to sell their products cheaper anywhere else.

California filed a lawsuit against Amazon on Wednesday accusing it of strong-arming sellers and driving up prices for consumers.

The lawsuit was filed by California Attorney General Rob Bonta. Bonta argues in the lawsuit that Amazon coerced sellers into signing agreements that they wouldn't sell their products for cheaper anywhere else. He argues Amazon's market dominance meant sellers had no realistic alternative option but to comply.

Bonta quoted an anonymous third-party seller in his lawsuit who said: "We have nowhere else to go and Amazon knows it."

The lawsuit says sellers who break with Amazon's policy risk having their products removed from the "buy box," the box on the right hand side of a product page that has the "add to basket" icon, and placing their products lower down on the results page when a shopper searches for an item.

The suit seeks to stop Amazon from enforcing contracts that restrict the prices sellers can set for their products off Amazon.

It also seeks damages for sellers and penalties for Amazon, but does not stipulate how much money that would equate to.

"We won't allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy," Bonta said in a statement.

In response to the lawsuit an Amazon spokesperson told Insider: "Sellers set their own prices for the products they offer in our store."

"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 spokesperson added.

They also referred to a similar lawsuit that was brought against Amazon in Washington DC, which was thrown out in March.

"We hope that the California court will reach the same conclusion as the DC court and dismiss this lawsuit promptly," Amazon's spokesperson said.

This isn't the first time Amazon has been accused of anticompetitive conduct in relation to third-party sellers.

The company shut down a third-party seller program and agreed to a $2.2 million settlement in January after Washington accused it of price-fixing.

In July 2020 House lawmakers grilled then-CEO Jeff Bezos about how Amazon treats third-party sellers and whether the retail giant uses data from sellers to give its own products a leg-up.

Bezos said Amazon has a policy against using third-party data to help its own-brand business, but added he couldn't guarantee that policy had never been violated.