The purpose was allegedly to ensure that the e-commerce giant's own prices remained the lowest on the market. The lawsuit was filed in 2022 by Attorney General Rob Bonta, and on Monday, supporting documents were made public in which he requests an immediate injunction to halt the company's current practices, notes Mashable.
How the Price Steering Allegedly Worked
According to the documents, the procedure usually begins with Amazon contacting suppliers with demands to adjust prices upwards at other e-commerce retailers. If this does not happen, suppliers risk limited visibility or being removed from Amazon's platform. The Verge summarizes the methods in three main approaches. Amazon is said to either agree with suppliers to raise the retail price or temporarily hide products at competitors. Alternatively, they demand, through the supplier, that a competitor raise its price so that Amazon can match the higher level. A third arrangement involves the supplier completely removing a product from a low-price competitor, after which Amazon can then raise its own price.
Email Conversations as Evidence
The filing presents specific email communication. In one case, Amazon allegedly sent links to clothing manufacturer Levi Strauss & Co. showing lower prices on pants at Walmart. A Levi's employee subsequently confirmed in a reply to Amazon:
I spoke with Walmart and they have agreed to... take Easy Khaki Classic fit back to $29.99 immediately.
The employee also wrote:
I really hope we can use this as a guiding example to resolve issues going forward.
Similar communication is said to exist regarding other players. Clothing company Hanes allegedly confirmed that they had contacted Target and Walmart to get prices raised after pressure. In another example, manufacturer Scotts was instructed to ask competitors to raise their prices in the three days leading up to Amazon's Prime Day campaign.
Parties' Comments
Attorney General Rob Bonta is critical of the methods and stated during a press conference that the state wants to protect residents from unnecessary costs. In a statement, Bonta said:
The company is engaging in price fixing and collaborating with suppliers and other retailers to raise costs for Americans beyond what the market demands.
Amazon rejects the allegations and is contesting the lawsuit. A spokesperson called the filing a "transparent attempt to distract from the weakness of the case" and emphasized that the company is proud of the low prices customers find in their store.
Walmart has declined to comment on the specific lawsuit, but states that they always work hard to keep prices low. Levi Strauss has not yet made any comment. The hearing regarding a preliminary injunction is scheduled for July.