California sues Amazon over anti-competitive practices

California's attorney general filed a lawsuit against Amazon Wednesday, alleging that the company "stifled competition" through anti-competitive practices. A tech coalition warns a judgment for the Golden State could result in higher prices for the retail giant's customers.

The lawsuit, filed in San Francisco Superior Court Wednesday by Attorney General Rob Bonta, asserts that Amazon's anti-competitive practices "hamper" the ability of the company's rivals to offer products at lower prices. The suit explains through anticompetitive agreements, Amazon's third-party and wholesale suppliers "agree not to offer, and to prevent Amazon's competitors from offering, lower prices elsewhere."

"​​Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anti-competitive agreements on price," the lawsuit states.

The lawsuit seeks to halt Amazon's anticompetitive practices by prohibiting the retail giant from entering into anti-competitive contracts in the future and order the company to compensate consumers for harms suffered as a result of higher prices, according to the attorney general's office.

"For years, California consumers have paid more for their online purchases because of Amazon's anticompetitive contracting practices," Bonta said. "With today's lawsuit, we're fighting back. We won't allow Amazon to bend the market to its will at the expense of California consumers, small business owners, and a fair and competitive economy."

Amazon could not be immediately reached for comment regarding the lawsuit.

Earlier this year, a judge in the Superior Court of the District of Columbia dismissed a lawsuit from Washington D.C. Attorney General Karl Racine that accused the company of antitrust violations by barring third-party sellers from offering lower prices for their products elsewhere, as previously reported by Reuters.

Shortly after the lawsuit was announced Wednesday, the Chamber of Progress, a tech industry policy coalition, issued a statement claiming the suit could result in higher prices on Amazon.

"People come to Amazon to save money, but this case would force Amazon to raise prices," CEO Adam Kovacevich said in a statement. "That makes no sense while consumers shop for bargains to counter inflation, and it's based on a legally unsound theory already rejected by federal courts."

Amazon has become the dominant online retailer in the United States, with more than 200 million Prime members worldwide. In California, the retail giant has about 25 million customers, according to Bonta's office.