The Superior Court of the District of Columbia (US) has taken Amazon to Court because its merchants (Third-Party sellers TPS) cannot sell a product on Amazon cheaper elsewhere – even on its own or clearance websites.
It is a long story but one that the US, EU, and the UK are litigating. Essentially Amazon’s Business Solutions Agreement (BSA) precludes TPS from listing the same product elsewhere at a lower price (price parity provision PPP) – even on their website or a clearance site. Amazon will quickly pull the listing and, in some cases, can levy penalties against the TPS.
Europe and UK have already ruled the PPP is anti-competitive. Amazon has withdrawn those provisions there. And in 2019, under intense scrutiny of the US Congress, Amazon removed the PPP from its US BSA. However, Amazon quickly replaced PPP with an effectively identical substitute, it’s Fair Pricing Policy (FPP).
TPS, however, are complaining that changing PPP to FPP is smoke and mirrors. Amazon has many ways to lower search visibility for such goods so they cannot win. In some cases, it banishes the TPS without reason – as it can under the BSA.
The US Court has found (but not yet ruled)
This practice, far from enabling consumers to obtain the best products at the lowest prices (Amazon’s covert claim), instead causes prices across the entire online retail sales market to be artificially inflated, both for products sold on Amazon’s online retail sales platform and on its competitors’ online retail sales platforms.
PPP artificially raises the price of goods across the entire online retail sales market. Why? Because TPS have no option but to incorporate Amazon’s high fees and costs into their product prices when selling on Amazon and elsewhere.
That the anti-competitive impact of Amazon’s conduct is compounded by a complex scheme of fees and extra charges. It charges up to 40% of the total product price because of its market power – over 70% of online sales in the US are on its platform.
That faced with such unconscionable BSA terms, many TPS are denied access to a large portion of the US market – it is Amazon’s way or the highway.
Amazon is only trying to protect its turf – or at least grow longer grass
In setting these fees and charges, it can artificially price the good above its house brand goods that it sells in direct competition with the TPS.
The full complaint is here (it is a PDF, so check downloads)
The rich get richer, and we all get screwed. Last year our US correspondent pulled no punches writing a series of articles on Amazon and trust. His conclusion was that the words Amazon and altruistic are not compatible. And no, he swears that there is no ‘tall poppy syndrome’ in his treatises.