California, the world’s fifth largest economy, is suing Amazon, the world’s largest retailer

Amazon has become the world’s largest retailer by engaging in anti-competitive practices, according to a new lawsuit filed by the California Attorney General’s Office.

“With every click and every swipe, and with every basket consumers are feeling the pain,” Attorney General Rob Bonta said at a Wednesday press conference announcing the lawsuit.

Bonta’s office alleges that Amazon, with more than 160 million Amazon Prime members in the U.S. and 25 million in California alone, has become a “must-have” distribution channel for merchants and third-party sellers.

Despite that, sellers complain that Amazon won’t let them offer their products for less money on a competitor’s website, such as Walmart, Target or eBay, using the company’s coveted “Buy Box” as leverage to force compliance.

This, in turn, has created an artificial price floor for items that is much higher than it needs to be, Bonta said.

“Like many people, I admire Amazon’s innovative model, but the company needs to follow the law and do business without illegally blocking competition,” Bonta said.

The attorney general alleged that this conduct has taken place over the last decade.

California is suing Amazon in San Francisco Superior Court for allegedly violating the Unfair Competition Law and the Cartwright Act, California’s antitrust law.

The state is seeking a court order prohibiting Amazon from entering into or enforcing its anti-competitive contracts. It also wants a court-appointed monitor to ensure compliance with the order, to secure damages to compensate for the harm consumers have experienced due to higher prices, and to order Amazon “to return its ill-gotten gains” and pay penalties, according to the attorney general’s office.

Bonta, who is running for election in November, said in the press conference that his office has had some meetings with Amazon officials, but declined to offer specifics.

In response to the suit, Amazon said in a statement:

“Similar to the D.C. Attorney General — whose complaint was dismissed by the courts — the California Attorney General has it exactly backwards. Sellers set their own prices for the products they offer in our store. 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. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law. We hope that the California court will reach the same conclusion as the D.C. court and dismiss this lawsuit promptly. “

This story was originally published September 14, 2022 at 12:36 PM.