California Court Deals Amazon Setback in Price-Fixing Case

Press release from the Office of Attorney General Rob Bonta:

California Attorney General Rob Bonta announced a victory in California’s ongoing case against Amazon for price fixing. The 2022 lawsuit alleges that Amazon employs anticompetitive pricing practices that stifle price competition among online retailers, causing higher prices for consumers on and off Amazon. In a ruling [April 15], the San Francisco Superior Court denied Amazon’s motion for summary judgment of its seventh crossclaim — a key aspect of its defense. This decision marks a significant defeat in Amazon’s continuing efforts to convince the Court that California’s antitrust laws do not apply to Amazon’s anticompetitive conduct.

“This victory is a key update in this case and sends a clear message to current and future behemoth corporations: The California Department of Justice will not allow consumers to be cheated,” said Attorney General Bonta. “While consumers face a crisis of affordability, there is no room for anticompetitive pricing practices that impede free market competition and raise prices for consumers. My office is committed to protecting fair competition and encouraging innovation; we will not stand by idly when powerful companies seek to manipulate the market for their own gains. Consumers and small businesses deserve justice, and today we’re happy to deliver it once more.”

BACKGROUND:

On September 15, 2022, Attorney General Bonta filed an antitrust and unfair competition lawsuit against Amazon, alleging that the company violated California’s Unfair Competition Law and Cartwright Act. The lawsuit demonstrates how Amazon’s pricing practices have allowed it to expand and entrench the company’s enormous market power as an online retail store, impede fair market competition, and impose prices above normal competitive levels. Attorney General Bonta defeated Amazon’s earlier effort to dismiss the lawsuit on the basis that California’s antitrust laws did not reach Amazon’s anticompetitive conduct. The Court has once again found that Amazon cannot demonstrate how removing the “Add to Cart” and “Buy Now” buttons — for products that don’t comply with Amazon’s pricing practices — is legal or procompetitive. This argument represented a significant aspect of Amazon’s defense, and it lost on all points. Attorney General Bonta recently filed a separate request for a preliminary injunction after a robust discovery process uncovered substantial evidence that Amazon, through its vendors, agreed to increase and fix the prices of products on Amazon and other retail websites to protect and bolster Amazon’s profits. The preliminary injunction will be heard on July 23, 2026, and trial is set for January 19, 2027.

Amazon is the dominant online retail store in the United States with public sources reporting 200 million Prime members nationwide. By its own account, Amazon is a driving retail force with 92% of consumers saying they are more likely to buy products from Amazon than other e-commerce sites, while 56% of consumers say they visit Amazon daily or at least a few times a week. Amazon continues to be the first place consumers look for product information, with 75% of consumers saying they check prices and product reviews on Amazon before making a purchase.

Amazon has gained substantial market power through agreements at the retail and wholesale level that prevent effective price competition in the online retail marketplace. Merchants must agree not to offer lower prices elsewhere — including on competing sites like Walmart, Target, eBay, and, in some cases, even on their own websites — and to accept drastic penalties like loss of the “Buy Box” on Amazon or to “compensate” Amazon if other online stores do lower their prices. Merchants that do not comply face sanctions such as less prominent listings and even the possibility of termination or suspension of their ability to sell on Amazon. Without basic price competition and different online sites trying to outdo each other with lower prices, prices artificially stabilize at levels higher than would be the case in a competitive market. This occurs not because Amazon competes successfully or because it is a more efficient retailer, but because Amazon is breaking the law.