FTC and 17 States Sue Amazon For Allegedly Inflating Prices, Overcharging Sellers, and Stifling Competition

The Federal Trade Commission and 17 states have filed a lawsuit against Amazon for allegedly inflating prices, overcharging sellers, and stifling competition.

The lawsuit, filed in federal court in Washington, accuses the e-commerce giant of violating state and federal anti-trust laws.

The Colorado Sentinel reports that the suit is asking for a permanent injunction to prohibit Amazon from engaging in “monopolistic control” to “restore competition.”

“The complaint accuses the company of engaging in anti-competitive practices through measures that deter sellers from offering lower prices for products on non-Amazon sites, an argument mirroring allegations made in a separate lawsuit filed last year by the state of California,” the report states. “The lawsuit says Amazon buries listings offered at lower prices on other sites. At the same time, it also charges sellers high fees, forcing merchants to raise their prices on the platform, as well as on other e-commerce sites in order to keep their products competitive on Amazon.”

Additionally, the states and FTC are arguing that Amazon is “degrading customers’ experience by replacing relevant search results with paid advertisements, favoring its own brands over other products it knows to be of better quality, and charging heavy fees that force sellers to pay nearly half of their total revenues to Amazon. According to the anti-monopoly organization Institute for Local Self-Reliance, the cut sellers give to Amazon from their revenue is up from 35% in 2020 and 19% in 2014.”

The lawsuit was brought on after several years of investigation and is one of the most significant legal challenges the online giant has faced since its launch.

“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” FTC Chairman Lina Khan said in a statement.

Amazon has alleged that the FTC is “wrong on the facts and the law.”

“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do,” Amazon General Counsel David Zapolsky said in a statement obtained by the Sentinel.