Amazon Class Action Lawsuit

Web retailer Amazon.com has been sued by the District of Columbia for imposing terms on third-party sellers that limit price competition and artificially raise the prices consumers have to pay for items sold by those third-party sellers, whether on or off Amazon.

Amazon controls more than 70% of all online commerce in the United States. That market is split between direct sales made by Amazon and sales made by other merchants through the "Amazon marketplace." As a practical matter, most online merchants need access to Amazon's marketplace to remain financially viable. To get access to that marketplace, third-party sellers must agree to Amazon’s terms. Those terms require that the merchants pay substantial fees to Amazon, sometimes upwards of 40% of the net revenue of each sale.

At the same time, the terms prohibit any third-party merchant from charging less anywhere else online than they charge on Amazon’s website. Because third-party sellers cannot sell for less even on their own websites, Amazon is able to charge more for its competing Amazon-branded items.

In imposing contracts on third-party sellers that raise prices for consumers, Amazon.com may have violated federal and state laws. 

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