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Washington, D.C., sues Amazon for inflating prices and the abuse of its monopoly

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The online retail giant was yesterday accused of unfair pricing policies and the abuse of monopoly. In the lawsuit filed by Washington, D.C., Attorney General Karl Racine in D.C. Superior Court, Amazon is accused of violating the city’s Antitrust Act.

Speaking to reporters, Racine said that Amazon has been “illegally abusing and maintaining its monopoly power by controlling prices across the online retail market” for years.

The main focus of this lawsuit is the restrictions that third-party sellers have to comply with when listing their merchandise on this platform. He said,” 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 also wants Amazon to stop using “anti-competitive” practices and damages and remedies to be issued for the violation of the anti-monopoly laws in the District of Columbia.

As a result of this agreement, the platform raises prices for consumers, and 40% of the product’s price goes to Amazon as fees. Further, third-party sellers are forced not to offer those products anywhere else at a lower price, increasing the retailer’s stronghold online.

The attorney general said, “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, and eBay, have only around 5% of the market each.”

On the other hand, Amazon disputed this argument saying 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 process across the broadest selection, and like any store we reserve the right not to highlight offers to customers to customers that are not priced competitively.”

In November, the European Commission had early accused Amazon of abusing competition rules. It found out that the retail giant had used third-party sellers’ data to boost sales of its private-label products.

However, Amazon defended its move by saying that those products were good and offered its customers more choice.

Other companies that have suffered this are Facebook and Google, where the U.S. and the U.K. regulators slammed them as being “too powerful.”

Amazon’s sales soared during the pandemic-related lockdowns as most people were forced to stay at home.

In the current lawsuit, the retailer says that the sought-for relief “would force Amazon to feature higher prices to customers.”

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