Amazon ends ‘Sold by Amazon’ following Washington attorney general suit
As a result of a price-fixing investigation from the Washington state attorney general, Amazon is shuttering a program that lets it set prices with third-party sellers.
In an official statement, Washington Attorney General Bob Ferguson said that Amazon will shut down the “Sold by Amazon” program nationwide. The Attorney General’s Office simultaneously filed a lawsuit and a legally binding resolution in King County (Wash.) Superior Court.
As part of the legally enforceable consent decree, Amazon must stop the “Sold by Amazon” program nationwide and provide the Attorney General’s office with annual updates on its compliance with antitrust laws. In addition, Amazon will pay $2.25 million to the Attorney General’s office, which will be used to support the antitrust enforcement, which does not receive general fund support.
The “Sold by Amazon” program allowed the online retailer to agree on price with third-party sellers, rather than compete with them. Ferguson’s lawsuit asserted that the program violated antitrust laws and that Amazon unreasonably restrained competition in order to maximize its own profits off third-party sales. According to Ferguson, this conduct constituted unlawful price-fixing.
Amazon offered the “Sold by Amazon” program from 2018 through 2020 on an invitation-only basis. It invited several hundred third-party sellers with whom it had previously competed for online consumer sales on its online marketplace and other e-commerce platforms.
Ferguson also asserted Amazon enticed sellers into the “Sold by Amazon” program by guaranteeing that they would receive at least an agreed upon minimum payment for sales of their consumer goods in exchange for their agreement to stop competing with Amazon for the pricing of their products. Consequently, if sales exceeded the negotiated minimum payment, Amazon and its competitors split the surplus proceeds amongst themselves.
The “Sold by Amazon” program resulted in prices for some products increasing when Amazon programmed its pricing algorithm to match the prices that certain external retailers offer to online consumers, according to Ferguson. As a result, when prices increased, some sellers experienced a marked decline in sales and resulting profits from products enrolled in the program.
“Consumers lose when corporate giants like Amazon fix prices to increase their profits,” Ferguson said. “Today’s action promotes product innovation and consumer choice, and makes the market more competitive for sellers in Washington state and across the country.”
Washington state ranks among the top 10 states in the nation with the fastest-growing rate of third-party sellers on its online marketplace.
Previous Amazon antitrust issues
Amazon has faced other antitrust investigations from state and federal government. For example, in May 2021, Washington, D.C. Attorney General Karl A. Racine accused Amazon of anticompetitive practices in a civil complaint, filed in D.C. Superior Court. The suit alleges that Amazon has fixed online retail prices through contract provisions and policies it applies to third-party sellers on its platform.
And the federal government has been scrutinizing Amazon for potentially anticompetitive practices since at least 2019, when the Federal Trade Commission (FTC) officially took on the role of overseeing the e-tail giant. National political figures as diverse as Sen. Elizabeth Warren (D-Massachusetts) and former U.S. Treasury Secretary Steven Mnuchin have publicly criticized Amazon for its business practices.