Amazon Forced To Shut Down “Sold By Amazon” Over Federal Violations

( The “Sold by Amazon” program that the ecommerce giant was running will now shut down.

The office of the attorney general in the state of Washington conducted an investigation that found Amazon violated antitrust and price-fixing laws through this program.

The details revealed by the office of Bob Ferguson found Amazon increased its prices so they matched that of third-party sellers, and also limited competition unreasonably to increase and maximize the company’s profits.

That’s according to a lawsuit that was filed at the same time as a consent decree by Ferguson’s office. The lawsuit states that every contract agreed to with third-party sellers through that program was unreasonable “for the development or preservation of business and is injurious to the public interest in protecting consumers and competition from unreasonable restraints of trade.”

The suit also claims that every contract in the “Sold by Amazon” program was a separate violation of the federal Consumer Protection Act.

The decree orders that Amazon not only shut down the “Sold by Amazon” program, but also give $2.25 million to the Washington attorney general’s office. That money will then be used to support the office’s enforcement of antitrust cases.

In a press release sent out this week, Ferguson said:

“Consumers lose when corporate giants like Amazon fix prices to increase their profits. Today’s action promotes product innovation and consumer choice, and makes the market more competitive for sellers in Washington state and across the country.”

The program was offered as an invitation-only program between 2018 and 2020.

According to the lawsuit, the algorithm Amazon used to set prices restricted the ability of all third-party sellers to change their own prices. Many of the prices were then fixed “artificially high because it was set without regard to changes that would affect price in a competitive market.”

The suit continues that many of the sellers in the program had prices that were “fixed, raised, maintained or stabilized at artificially high levels through price increases, price floors and/or discount prevention.”

As a result of this action, consumers ended up paying more money for the products they purchased compared to the prices they would’ve paid in a traditionally competitive market.

Around the world, there are roughly 2.3 million third-party sellers on Amazon’s site. Between 1999 and 2018, sales on the site went from $100 million all the way to $160 billion — and more than half of that came from third-party sellers.

Amazon maintains that the “Sold By Amazon” program provided many options for millions of small businesses to have their products reach market at a much lower price than they could have on their own.

A spokesperson for the company commented:

“While we strongly believe the program was legal, we’re glad to have this matter resolved.”

This is one example of an antitrust case against a Big Tech firm that was successful from start to finish. There may be many more coming down the pipeline in the near future.