Amazon ending program after Washington state attorney general's lawsuit

·2 min read
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Amazon is shutting down a third-party seller program it operated after Washington state Attorney General Bob Ferguson (D) filed a lawsuit in which he said his investigation found the program violated antitrust laws.

Amazon operated its "Sold by Amazon" program from 2018 to 2020. Ferguson said in his lawsuit that the program allowed Amazon to agree on prices with third-party sellers instead of competing with them, which he characterized as illegal price-fixing.

As part of the agreement, Amazon will stop its "Sold by Amazon" program nationwide as well as pay the Washington attorney general's office $2.25 million, which will go towards antitrust enforcement.

The invite-only program involved hundreds of sellers that Amazon had previously competed with for sales. Ferguson noted that third-party sales account for more than half of Amazon's sales.

"Consumers lose when corporate giants like Amazon fix prices to increase their profits," Ferguson said in a statement on Wednesday. "Today's action promotes product innovation and consumer choice, and makes the market more competitive for sellers in Washington state and across the country."

The "Sold by Amazon" program guaranteed third-party sellers a minimum payment in exchange for the seller agreeing to stop competing with Amazon. If sales exceeded the agreed upon minimum, then Amazon and the seller would split the profit.

However, according to Ferguson, some sellers experienced market declines when prices increased and Amazon customers opted to buy cheaper versions of the product, often from Amazon's own product line. The program also limited sellers' ability to lower their own prices, as it set the price floor as the first price that the products were sold at when the seller joined "Sold by Amazon."

Amazon told The Seattle Times it suspended the program in 2020 for reasons unrelated to Ferguson's investigation and believes the program was legal and beneficial.

"This was a small program to provide another tool to help sellers offer lower prices, much like similar programs common among other retailers, that has since been discontinued," an Amazon spokesperson said in a statement provided to The Hill. "While we strongly believe the program was legal, we're glad to have this matter resolved."

This is not the first time that Amazon has faced allegations of violating antitrust laws. In May of last year, Washington, D.C., Attorney General Karl Racine (D) filed a lawsuit similarly accusing the company of entering into anti-competitive agreements.

In November, Racine expanded his lawsuit to allege that Amazon imposed a minimum profit guarantee on wholesalers who sell on its platform, with the attorney general accusing the company of working to "rig the system, leading to higher prices for consumers and less competition among online marketplaces."

Italy's antitrust regulator fined the tech giant $1.3 billion last month, saying Amazon had pressured sellers to use its in-house delivery fulfillment service, thereby hurting competitors.

--Updated at 1:17 p.m.

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