Dive Brief:
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Amazon will end its “Sold by Amazon” program, following antitrust enforcement action by Washington state, Attorney General Bob Ferguson’s office announced on Wednesday. The SBA program amounted to unlawful price-fixing, according to a press release from Ferguson’s office.
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“This was a small program to provide another tool to help sellers offer lower prices, much like similar programs common among other retailers, that has since been discontinued,” an Amazon spokesperson said by email. “While we strongly believe the program was legal, we’re glad to have this matter resolved.”
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In addition to ceasing the program nationally, Amazon must pay $2.25 million to the Washington State Attorney General’s office and provide it with annual updates showing that it’s complying with the legally binding consent decree, according to the release.
Dive Insight:
When Amazon launched this program in 2019, it touted it as a seller perk, describing it as “a free, opt-in service that helps selling partners save time and increase sales by automating prices so they can consistently and effortlessly offer customers great prices.”
The SBA program turned over participating sellers’ pricing decisions to Amazon, which automated prices and guaranteed sellers a minimum. On Thursday, an Amazon spokesperson said it was discontinued in 2020 for business reasons, unrelated to the legal challenge, and that the company still believes it was good for sellers and customers.
But some attorneys general have looked askance at Amazon’s pricing structures.
Last year the District of Columbia Attorney General similarly maintained that the e-commerce giant used its power over sellers to illegally control prices. At that time Amazon countered that the “DC Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store.”
In Washington State’s King County Superior Court, Amazon faced a lawsuit alleging that SBA ran afoul of antitrust law because it entailed pricing agreements with its third-party sellers, rather than competition with them.
“Consumers lose when corporate giants like Amazon fix prices to increase their profits,” Ferguson said in a statement. “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 upshot for sellers and consumers alike depends on what Amazon cooks up next, according to George Hay, professor of law and economics at Cornell Law School. The e-retailer is now subject to a legally binding resolution that, among other provisions, prohibits it from resuming SBA or creating another program like it.
“One possibility is that shutting down the program will mean that certain suppliers will no longer gain the ready access to consumers that they have been enjoying through the program and that consumers as a result will be worse off,” Hay said by email. “This depends partly on what, if anything, replaces the program.”
Editor’s note: This story was updated to include Amazon’s official statement.
