Amazon.com, Inc. (NASDAQ:AMZN) Alleged by California Authority for Artificially Prices High

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Amazon.com, Inc. (NASDAQ:AMZN) slightly down in pre trading session on Thursday as it surges 1.36% or -$1.73 to close the trading at $128.55 following it hit intraday high level of $128.84. California filed a lawsuit against Amazon.com Inc., alleging that the business compels third-party merchants to adhere to restrictions that result in “artificially inflated costs” for customers.

State Attorney General Rob Bonta launched the antitrust complaint on Wednesday, which challenges Amazon merchant agreements that prohibit vendors from providing cheaper rates on rival sites and levy harsh fines if they do. He claims that the agreements prevent other online shops from competing, resulting in increased fees for merchants and higher costs for customers.

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Bonta stated in a statement that Amazon coerces retailers into agreements that artificially raise pricing, knowing full well that they can’t afford to say no. The lawsuit, filed in San Francisco state court, seeks an injunction prohibiting Amazon from engaging in anticompetitive activities and compensation for California customers.

The claim comes three years after Bloomberg revealed that the company’s pricing strategies were causing vendors to hike their prices on other sites like Walmart Inc. because Amazon would bury their items in search results if they offered cheaper prices on other sites.

Similarly, Bonta’s claim stated that merchants risked receiving less prominent placement on Amazon or possibly being removed from the site if they charged less on competitors such as Walmart, Target, eBay, and, in some cases, their own websites.

It’s not the first time Amazon’s merchant policy has come under fire. The California claims is identical to one brought by Washington, D.C. Attorney General Karl Racine last year. Racine is attempting to resurrect the lawsuit on appeal after a court rejected it last year. The Justice Department filed an amicus brief in support of Racine’s appeal, claiming that the judge who rejected it used antitrust law incorrectly.

Amazon spokesperson Alex Haurek said in a statement Wednesday that similar to the D.C. attorney general, whose lawsuit was dismissed by the courts. Sellers determine their own pricing for the items they sell in their shop. He added, the relief sought by Bonta, would force Amazon to display greater pricing to customers, bizarrely going against key objectives of antitrust law. On the other hand, Amazon (AMZN) officially launches small business month to endow small businesses.

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