Emails involving Amazon vendor managers and Levi's, Hanes, GlobalOne and Scotts Miracle-Gro sit at the centre of California’s claim that Amazon pressed brands to charge more at rival retailers. Business Insider said it obtained the full case file, reviewing hundreds of pages of documents and over a dozen email exchanges.
California alleges that the pressure formed part of a price-fixing scheme affecting Target, Walmart, Chewy and Best Buy. The state says Amazon pushed wholesale vendors to raise their prices at those competitors.
Smaller merchants describe similar pressure. The inventors of the Bed Scrunchie, third-party sellers, say Amazon pressed them to raise prices at other retailers.
The dispute turns on Amazon’s requirement that sellers give Amazon customers the lowest price for their products. The provision is known as a 'most favored nation' (MFN) clause, according to the Federal Trade Commission and California complaints.
Those complaints say sellers who fail to comply can be downranked in Amazon search results. Sellers also face higher costs of doing business on Amazon than on alternative e-commerce platforms.
Amazon effectively requires sellers to use its own fulfilment service to obtain the 'Prime' badge, the complaints say. The FTC says Amazon’s fulfilment service costs more than alternatives including FedEx. Sellers also effectively need to buy advertising if they want their products to appear to customers in Amazon search results.
That leverage matters because Amazon is the dominant e-commerce platform in the United States and serves 180 million Amazon Prime subscribers in the country.
Amazon has rejected the regulators’ characterisation, saying its conduct is pro-competitive and ultimately saves customers money. Whether the alleged pressure amounts to illegal coercion, whether particular vendors coordinated with Amazon, and whether prices actually rose at the named rival retailers remain unresolved.
California had already brought a separate case in 2022 alleging similar conduct under state law.
The FTC followed with a federal lawsuit against Amazon in 2023, filed during President Joe Biden’s administration under then-FTC chair Lina Khan. The Trump administration has continued to pursue that case.
Regulators have opened another front in the company’s advertising business. The FTC and state attorneys general from New York, California, Florida and 22 states in total sued Amazon over its advertising sales.
In that case, the FTC says Amazon manipulated advertising auctions and told advertisers it used a 'second-price' auction, while the dispute concerns whether its actual charges matched what advertisers were led to expect.
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