On Wednesday, Washington Attorney General Bob Ferguson announced an agreement between his office and Amazon.com Inc., resolving allegations that Amazon engaged in a price-fixing scheme to avoid competing with third-party sellers on overlapping products and to maximize its own profits. The announcement is joined by two simultaneous findings, both the lawsuit and a consent decree filed in Washington’s King County Superior Court.
The complaint explained that the state’s investigation into the Sold by Amazon (SBA) program found that contracts allowed Amazon to agree on price with third-party sellers, rather than compete with them. The set up resulted in an illegal price-fixing scheme, the lawsuit said.
From 2018 to 2020, several hundred third-party sellers of several million worldwide, with whom Amazon had previously competed for online consumer sales in its online marketplace and other e-commerce platforms, were invited to join the SBA program.
The lawsuit reported that the program had numerous effects, including guaranteeing sellers a minimum price on enrolled products and splitting excess revenue with Amazon. Other impacts hurt sellers while enabling Amazon to maximize its profits, the filing said. For example, the complaint alleged that many sellers remained stuck with an artificially high-priced product that could no longer be discounted, causing the product to take longer to sell or not sell at all, while the third-party seller continued to pay Amazon for storage and other fees.
In addition, the press release set forth several figures helpful to contextualizing the SBA program and the rise of Amazon-branded products. “Over the last two decades, Amazon’s sales of its own branded products grew from $1.6 billion in 1999 to $117 billion in 2018. Over that same period, third-party sales grew exponentially from $100 million in 1999 to $160 billion in 2018. Third-party sales account for over half the sales on Amazon,” the announcement said.
This week’s resolution requires Amazon not only to discontinue the SBA program nationwide and provide Ferguson’s office with annual updates on its antitrust compliance, but also to pay a penalty of $2.25 million. The funds will be used to support the office’s antitrust enforcement arm.
