Comment by terminalshort
4 days ago
Rules around pricing like that are standard retail practice since well before the internet even existed.
4 days ago
Rules around pricing like that are standard retail practice since well before the internet even existed.
Many standard practices become illegal when you have the amount of market power that Amazon does.
I'm not convinced Amazon has any market power here. Online and physical retail competitors are alive and well, so Amazon has very little room to actually push up prices. It's margins in this area are under 5%. AWS has market power and has a 25% margin, and yet the complaints almost always focus on the retail side.
Here is the Complaint of the People of the State of California about Amazon - https://oag.ca.gov/system/files/attachments/press-docs/2022-...
Section V is on Amazon's market power.
Section VII is on the anti-competitive effects of Amazon's conduct.
You argue the market space includes physical retail competitors, which the complaint rejects. They describe their reasoning, point out how Jeff Bezos also doesn't see them as interchangeable, hence "physical stores and online stores are not reasonably interchangeable substitutes for one another from the standpoint of consumers".
Indeed,"most merchants—even those that sell through both channels—do not consider physical brick-and-mortar stores to be in the same market as online stores".
It also describes the effect on third-party sellers, like how Chewy.com, Wayfair.com, and Newegg.com charge lower fees, so the seller would like to set a lower price there, but Amazon's policies and market power inhibit the seller "because doing so would result in the suppression of the Buy Box for their Amazon listing."
There's a dozen or so examples of sellers raising their prices elsewhere in order to no lose the buy box, affecting also Amazon competitors:
> A major competing online marketplace to Amazon itself confirmed that it has heard from merchants that they would need to raise their prices on its marketplace or decline to participate in a discount/sale event because a lower price on its marketplace had disqualified or could disqualify their offers from the Amazon Buy Box. This rival marketplace operator reported that during a sales event, certain merchants contacted it to pull their items from the event or indicated that they would need to raise their prices because they reported that they had lost the Buy Box on Amazon, believed they would lose the Buy Box on Amazon, or believed that they would be delisted on Amazon because their item prices were lower on this competing website for the event. ...
> one Walmart manager reported to Bloomberg that “Walmart routinely fields requests from merchants to raise prices on its marketplace because they worry a lower price on Walmart will jeopardize their sales on Amazon.”
> Amazon’s coerced price parity agreements with Marketplace sellers constitute unlawful contracts and/or combinations in restraint of trade in violation of the Cartwright Act.
(The Cartwright Act is California's main antitrust law.)
Are you still not convinced, and if not, why not?