Report from Redheaded Blackbelt
In Brief – San Francisco Superior Court Judge Ethan Schulman has ruled that there is sufficient evidence backing the state’s antitrust lawsuit targeting Amazon’s price-parity regime that a jury will hear the case. The state’s lawsuit, filed in 2022, argues that Amazon’s price-parity regime, specifically its “Select Competitor – Featured Offer Disqualification” (SC-FOD) system, is illegally used to coerce sellers to raise their prices elsewhere to protect sales on Amazon. The SC-FOD system governs whether a seller’s product qualifies for Amazon’s prominent “Featured Offer” (Buy Box), through which most sales on Amazon are made. The company disqualifies products that are sold for lower prices on other platforms. In his ruling denying Amazon’s motion for summary adjudication, Schulman said, “Amazon’s superior market power in combination with multiple notifications, direct communications with sellers, and even coaching sellers regarding price parity, whether standing alone or in totality, are at least indicia of coercive conduct” by the ecommerce giant. The lawsuit is scheduled for a January 2027 trial.
Context – The California AG released evidence from within Amazon reinforcing why its “price parity” policies have been in the crosshairs of competition regulators and plaintiffs for years. Amazon argues that they simply push third-party sellers to lower their prices on Amazon, which benefits consumers. Critics respond that Amazon penalizes sellers who want to sell at lower prices on other platforms that charge lower seller fees to protect itself from low fee competition. The price tactics are especially problematic because Amazon fees often reach 50% and it is the dominant online marketplace in many major markets. Sellers that could offer lower prices to shoppers on low fee platforms often won’t risk losing sales to Amazon’s Buy Box penalties. Amazon’s price practices are the subjects of class action lawsuits in US federal court and in the UK, the FTC’s major antitrust case, an antitrust lawsuit filed by defunct low-fee online marketplace Zulily, and a recent antitrust order and €59 million fine from Germany’s competition authority.