Merchants and consumers alike have been damaged by Amazon’s “referral fees,” which ultimately inflate the prices of goods sold by the retail giant, a proposed class action says.
Describing Amazon.com, Inc. as “[l]ike Standard Oil and the robber-barons of old,” the 22-page lawsuit claims the company has maintained a monopolistic grasp on the digital retail market and used its “pervasiveness” to impose upon merchants referral fees that ultimately cause sellers to charge more for their items. Per the lawsuit, merchants subject to Amazon’s referral fees, which are paid in exchange for the use of the company’s e-commerce platform, include these effective commissions in the prices charged to consumers.
“In a normal competitive and functioning market, merchants would charge a lesser, more competitive price on Amazon than they would absent the ‘referral fees,’” the antitrust complaint, filed in Washington’s Western District Court on June 23, claims, alleging that the defendant’s “policy of overcharging consumers is woven into the fabric of Amazon’s existence.”
The case also centers on the “price parity clause,” known otherwise as a “most favored nations clause” (MFN), within Amazon’s Services Business Solutions Agreement. The suit alleges that although Amazon purportedly withdrew the price parity clause and replaced it with a “fair pricing policy,” the latter has the same effect on sellers as the company’s former MFN clause.
“The MFN forbids merchants from being able to sell their goods at cheaper prices on other e-commerce platforms within the Relevant Market,” the lawsuit says. “This, in effect, fixes, stabilizes, and/or increases the prices of goods sold on alternative e-commerce platforms.”
Further, the case claims Amazon is also a “horizontal competitor” to merchants in that it sells the same goods they sell on Amazon.com. The lawsuit contends that because other merchants’ items are “overpriced” as a result of referral fees, Amazon is able to undercut other sellers’ prices with its own brands of goods, thereby “vanquishing competition and eliminating consumer freedom to purchase the goods they seek in a normal functioning market free of anticompetitive conduct.”
The class proposed for coverage includes all persons who, on or after May 26, 2017, purchased one or more products through Amazon’s platform.
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