Amazon.com Class Action Lawsuit Alleges Anticompetitive Agreements

Amazon.com uses anticompetitive agreements that set a price floor and restrict price competition for retail e-commerce, causing consumers in Canada to pay inflated prices, according to a class action lawsuit filed in Toronto federal court.

“Since its humbler beginnings as an online retailer of books, Amazon has grown into the world’s largest online retailer for all varieties of products,” the Amazon anticompetitive agreements class action lawsuit says.

“The number of products sold on Amazon’s platform, and the number of consumers who use this platform to purchase products, makes Amazon the ‘must use’ e-commerce platform for most online sellers.”

However, Amazon’s use of anticompetitive agreements has allegedly cost Canadian consumers more than $12 billion, the Amazon.com class action lawsuit alleges.

Amazon’s Alleged Anticompetitive Agreements

According to the Amazon.com class action lawsuit, Amazon’s sales have accounted for 40 to 66% of sales on the Amazon platform since 2010. The company also authorizes third-party sellers to use the Amazon.com platform to sell products to consumers.

“Within these product categories, Amazon as the seller of record is in fact a direct competitor or potential competitor of third-party sellers,” the Amazon Canada class action lawsuit states.

However, Amazon and its competitor third-party sellers have allegedly entered into two anticompetitive agreements to fix retail e-commerce prices.

The first agreement the Amazon.com class action lawsuit refers to is a most favored nation provision, which allegedly provides that third-party sellers would not sell products on any e-commerce website at a price lower than the price listed on Amazon’s platform. Amazon reportedly withdrew this agreement in March 2019 when it was threatened with an antitrust investigation by the U.S. Federal Trade Commission.

The second agreement reportedly involves third-party sellers complying with Amazon’s “fair pricing” policy, which penalizes third-party sellers for selling products on other e-commerce websites at a lower price than charged on Amazon’s platform.

“The punishment or threatened punishment is effective,” the Amazon.com class action lawsuit says of the second agreement. “Sellers continue to maintain price parity across competing retail e-commerce websites.”

Class Action Lawsuit: Amazon’s Anticompetitive Agreements Result in Inflated Prices

According to the Amazon.com class action lawsuit, these anticompetitive agreements allow Amazon to maintain an illegal competitive advantage over other retailers and limit price competition on products sold by third-party sellers on other websites.

“These agreements unlawfully restricted price competition by all sellers of products on Amazon’s platform and other e-commerce websites, leading to inflated prices of products sold in retail e-commerce to consumers who used the Amazon platform and other e-commerce websites to purchase products,” the Amazon.com class action lawsuit alleges.

The plaintiffs argue that, in a competitive market, the prices of products sold on all e-commerce websites would be lower because consumers would be able to search for a product sold on e-commerce websites and potentially find the product at a lower price than the price listed on Amazon’s website, and e-commerce websites that compete with Amazon would lower fees charged to sellers, causing Amazon’s fees to be lower.

Plaintiffs Seek Refunds for Overpayment

Plaintiff Stephanie Difederico of Windsor, Ontario, says she has used Amazon’s website and other e-commerce websites to purchase products. Plaintiff Jameson Edmond Casey of Amherstburg, Ontario, says he has purchased products from eBay and other e-commerce websites.

Difederico and Casey filed the Amazon.com class action lawsuit on behalf of themselves and a proposed Class of Canadians who purchased products on Amazon.ca, Amazon.com or any other e-commerce website since June 1, 2010.

The defendants listed in the Amazon.com class action lawsuit include: Amazon.com Inc., Amazon.com.ca Inc., Amazon.com Services LLC, Amazon Services International Inc. and Amazon Services Contracts Inc.

The Amazon.com class action lawsuit asserts claims for discoverability and fraudulent concealment and breach of the Competition Act. It seeks damages in the amount each Class Member allegedly overpaid for products as a result of the anticompetitive agreements.

This is not the first time Amazon has faced allegations that it engaged in anticompetitive conduct. Another Amazon Canada class action lawsuit challenging Amazon’s “fair pricing” policy was filed in Quebec.

What do you think about the allegations that Amazon entered into anticompetitive agreements with third-party sellers? Do you think the Amazon.com class action lawsuit will be successful? Tell us what you think in the comments section below.

The plaintiffs are represented by David R. Wingfield and Jay Strosberg of Strosberg Sasso Sutts LLP and by James C. Orr and Klye R. Taylor of Orr Taylor LLP.

The Amazon.com Class Action Lawsuit is Stephanie Difederico, et al. v. Amazon.com Inc., et al., Case No. T-445-20, in Toronto Federal Court, Canada. 

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