One of Amazon’s sales programs has been deemed illegal

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Following an investigation into its Sold by Amazon program, Amazon agreed to pay the office of Washington State Attorney General office $2.25 million and provide annual updates on its antitrust compliance. Available between 2018 and June 2020, the program set a price floor for certain products, which the attorney general’s office said “constituted illegal price fixing.”

Amazon enrolled a small number of third-party sellers in the program while it was available. The retailer promised sellers they would earn a guaranteed minimum on their products, provided they agreed not to compete with the business. Additionally, merchants could earn additional revenue if Amazon’s algorithm determined that consumers were willing to pay extra for their product, with the company splitting the difference between them. “For example, if a seller and Amazon agreed to a minimum payment of $20 and the item sold for $25, the seller would receive the minimum price of $20 and split the additional $5 profit with Amazon, plus fees. eventualities,” Attorney General Bob Ferguson said. wrote.

According to Ferguson, the problem with the system was that it set a product’s minimum price as the floor of what Amazon would offer consumers. When the price of their products rose, some sellers saw a “drastic” drop in sales, in part because some consumers would choose to buy similar but more affordable products from Amazon and its various private labels. The program, according to the AG, was in violation of antitrust laws.

The state began its investigation into Sold by Amazon in March 2020. The program was halted in June of that year but, according to an Amazon spokesperson, for reasons unrelated to the attorney general’s investigation. As part of its agreement with the state, the company will no longer offer the Sold by Amazon program.

“This was a small program intended to provide another tool to help sellers offer lower prices, much like similar programs common at other retailers, which have since been discontinued,” the company said. company. “While we strongly believe the program was legal, we are pleased that this matter has been resolved.” When pressed, Amazon declined to say why it hadn’t challenged the resolution.

In recent years, Amazon has come under intense scrutiny over how it operates its online marketplace. In 2020, The Wall Street Journal released a report claiming that the company used proprietary vendor data to design and price its internal products. During a Senate hearing, former Amazon CEO Jeff Bezos said he couldn’t “guarantee” the company hadn’t abused data from third-party merchants on its platform. Last week, the Senate Judiciary Committee advanced the US Online Innovation and Choice Act, legislation that would prevent companies like Amazon from favoring their own products over those of their rivals. Like Apple and Google, the company lobbied aggressively to prevent the bill from passing.

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