California says Amazon pressured retailers to boost prices on their websites to not undercut it

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Amazon used its market leverage to get companies such as Walmart to increase prices on their websites so the e-commerce giant would not be undercut by its competitors, according to a filing unsealed Monday in an ongoing lawsuit by California’s attorney general.

Attorney General Rob Bonta sued Amazon in San Francisco Superior Court in 2022 accusing the company of violating the state’s antitrust and unfair competition laws. The lawsuit is scheduled to go to trial next year but Bonta is asking the judge to order Amazon to cease its practices immediately.

According to the filing, the alleged price fixing scheme generally begins with the Seattle-based company demanding vendors to fix or look into prices of products on other websites and request that those prices be increased or else face penalties such as promotion restrictions or even removal of products from Amazon's site.

For example, the filing alleges that Amazon, apparel company Levi Strauss & Co. and Walmart agreed to fix prices on khaki pants. Amazon sent the denim retailer links to pants that were priced lower on Walmart.com, saying it “hop(ed) these can get resolved over the next few days.”

The next day, Levi Strauss reported having talked to Walmart to increase prices back to $29.99, according to the filing.

“This is about protecting Californians from paying more than they should for everyday products, especially at a time when affordability feels farther and farther out of reach,” Bonta, a Democrat, said Monday at a virtual news conference.

In a statement, a spokesperson for Amazon dismissed Bonta's motion as “a transparent attempt to distract from the weakness of its case” with “supposedly ‘new’” evidence.

“Amazon is consistently identified as America’s lowest-priced online retailer, and we’re proud of the low prices customers find when shopping in our store. Amazon looks forward to responding in court at the appropriate time,” the statement said.

A Walmart spokesperson said in an email that it does "not comment on litigation in which we are not a party. We will always work hard on behalf of our customers to keep our prices low.”

Levi Strauss did not immediately respond to a request for comment.

Bonta said that his office is focused on Amazon because “the unlawful conduct stems from and originates from Amazon” but reserved the right to go after other retailers and vendors in the future.

The alleged price fixing involves a wide assortment of goods, including home decor, garden products and pet care, according to the filing.

The hearing for the motion for a preliminary injunction is in July.