Amazon agreed Wednesday to shut down its “Sold by Amazon” program after a lawsuit filed by Washington state’s attorney general alleged it amounted to an illegal price-fixing scheme.
“Consumers lose when corporate giants like Amazon fix prices to increase their profits,” Washington Attorney General Bob Ferguson (D) said in a statement posted on the office’s website. “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 Sold by Amazon program began in 2018, according to the lawsuit, as an invitation-only program for third-party sellers. It was billed as a way for sellers to avoid constantly monitoring and changing product prices. Instead, Amazon would optimize the price, guaranteeing sellers a minimum price. The lawsuit alleges that Amazon used the program to prevent third-party sellers from undercutting Amazon’s prices. (Amazon founder Jeff Bezos owns The Washington Post.)
This hurt consumers, the lawsuit alleges, because it removed the possibility that a specific product would be discounted. It also hurt sellers, according to the complaint, because it led consumers to more often buy products directly from Amazon, since third-party sellers did not offer a lower price.
As part of the legally binding resolution filed Wednesday, Amazon must check in with the attorney general’s office once a year for five years, certifying that it is in compliance with the agreement.
“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. While we strongly believe the program was legal, we’re glad to have this matter resolved," said Amazon spokesman Glenn Kuper.