DC sues Amazon over alleged antitrust violations

The District of Columbia filed an antitrust lawsuit against Amazon on Tuesday, alleging the tech giant has abused its market dominance in e-commerce to harm competition and keep retail prices artificially high across the entire internet.

DC Attorney General Karl Racine’s lawsuit against Amazon (AMZN) zeroes in on the e-commerce company’s relationships with third-party sellers, alleging that Amazon (AMZN)’s contracts prohibit sellers from offering their products at a lower price on other websites.

The contract terms mean that the platform fees Amazon demands of its sellers — which are passed on to Amazon shoppers — must also be baked into the prices that shoppers see on sites such as Walmart’s, Racine told reporters on a conference call. In some cases, Racine said, Amazon sellers are charged fees amounting to 40% of the total product price on Amazon.

“These restrictions allow Amazon to build and maintain monopoly power in violation of District law,” Racine said.

Tuesday’s lawsuit is the latest in string of complaints by attorneys general against large tech companies over the past year, following separate antitrust suits by numerous states against Facebook and Google. But it appears to be the first antitrust suit by an attorney general to go after Amazon. The suit calls for a court order prohibiting Amazon from engaging in anticompetitive behavior and any other necessary measures, including a corporate breakup if need be.

The District’s lawsuit, filed in DC Superior Court, cites an Amazon document known as the Fair Pricing Policy, which states that Amazon may remove seller listings, give them less prominent placement on Amazon’s site, or ban sellers altogether in response to “pricing practices that harm customer trust,” such as “setting a price on a product or service that is significantly higher than recent prices offered on or off Amazon.”

According to the complaint, that language allows Amazon to “penalize a seller for selling products on non-Amazon online retail sales platforms for a better price or on better terms.”

In a statement, an Amazon spokesperson said Racine “has it exactly backwards.”

“Sellers set their own prices for the products they offer in our store,” the statement said. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

Amazon said Racine’s proposed remedy would “force Amazon to feature higher prices to customers.”

The District’s suit alleges that Amazon has violated DC’s antitrust law. It does not contain any allegations that Amazon violated federal antitrust law, and Racine’s office is not currently working with other federal or state officials on this suit.

Still, he told CNN Business that could change.

“It’s not unusual after a suit for other attorneys general to express an interest in the lawsuit and join or file their own,” Racine said.