After an inquiry by Washington Attorney General Bob Ferguson, Amazon is shutting down its “Sold by Amazon” initiative, which was deemed anticompetitive and in violation of antitrust rules. According to the consent decree filed in King County Superior Court on Wednesday, the company engaged in unlawful price fixing and unduly hindered competition in order to maximize its profits. As a consequence of the probe, Amazon will discontinue the program countrywide and pay the attorney general’s office $2.25 million, as well as submit annual reports on its antitrust compliance.
For those unfamiliar with “Sold by Amazon,” the program worked like this: Amazon would reach out to a third-party seller, and the two would agree on a minimum price for an item. If Amazon then sold the product for a higher price, they would split the earnings. In some ways, it’s similar to buying items at a wholesale discount and reselling them. That wasn’t the case, though, due to Amazon’s dynamic pricing and how they present the items in the marketplace.
According to the AG’s office, Amazon ended up raising the prices of the items to match those of other merchants, and vendors were unable to give discounts. As a result, purchasers were frequently compelled to buy Amazon’s own brands, which the company could price as it pleased. Not only was this a terrible deal for sellers, but AG Ferguson said the program violated Washington state antitrust laws.
Rather than fight the judgment, Amazon elected to pay the fine and shut the program down. It was a shocking turn of events, since the program had been expanding since it started in 2018. The AG’s press release also contained detailed information on previous Amazon antitrust cases and investigations into other Amazon products.
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For sellers, a program of dubious merit that was causing more pain than profit was eliminated. It’s one of several recent investigations into marketplace price fixing, but the first to nail Amazon with the charges. And while $2.25 million is merely pocket change to the mega-corporation, the legal ramifications of the investigation’s findings could go on to become the basis of other antitrust lawsuits or the impetus for state or federal regulation of the marketplace in the future.
Read more at The Seattle Times.