D.C. Sues Amazon, Accusing It Of Inflating Prices And Abusing Its Monopoly

Washington, D.C., Attorney General Karl Racine is suing Amazon, accusing the online retail giant of unfairly inflating prices and stifling competition.

The lawsuit, filed in D.C. Superior Court on Tuesday, alleges violations of the city's Antitrust Act.

In a call with reporters, Racine said Amazon has been "illegally abusing and maintaining its monopoly power by controlling prices across the online retail market" for years.

The lawsuit focuses on the restrictions that third-party sellers agree to when they list their products on Amazon's marketplace. "Third-party sellers have to agree that they will not offer their products anywhere else online, including their own websites, for a lower price than on Amazon," Racine said.

These provisions are known as "most favored nation" agreements.

Racine, a Democrat, argues that these agreements raise prices for consumers by imposing an artificially high price floor. Amazon's fees paid by third-party sellers can amount to as much as 40% of a product's price, according to court filings, which then results in higher prices across the entire retail sales market because sellers have to agree they won't offer lower prices anywhere else.

As a result, Racine says, Amazon has an ever-increasing stronghold on the online retail market.

"Amazon is estimated to have between 50 to 70% of the market share of the online retail sales market. By contrast, the next two largest retail platforms, Walmart.com and eBay, have only around 5% of the market each," the attorney general said.

Amazon disputes these arguments.

In a statement Tuesday, the company said that Racine "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."

Amazon says the relief sought in the lawsuit — relief that includes structural changes and a corporate monitor as well as penalties and damages — "would force Amazon to feature higher prices to customers."

NPR tech correspondent Shannon Bond contributed to this report.

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