NAW Says Amazon’s Marketplace is a ‘Trap,’ Urges Legislation Passage

The eCommerce giant was also sued Sept. 14 by the State of California for violating anti-trust and unfair competition laws.
Screen Shot 2022-09-15 at 9.29.55 AM

Editor’s note: This news has been updated with a response from an Amazon spokesperson.

On Sept. 13, the National Association for Wholesaler-Distributors announced a new public affairs campaign urging Congress to “level the playing field” between eCommerce giant Amazon and its third-party sellers by passing a proposed Senate bill.

In a press release and one-minute video, NAW voiced its support for the American Innovation and Choice Online Act, or U.S. Senate Bill 2992. Introduced by Senators Amy Klobuchar, D-Minnesota, and Chuck Grassley, R-Iowa, and passed out of committee legislation, NAW describes S. 2992 as “a vital start in checking Amazon’s anti-competitive business practices and addressing many of the wholesale distribution industry’s well-known issues with Amazon’s treatment of third-party sellers.”

“Amazon uses its marketplace as a trap to unfairly stamp out competition, by taking data from the millions of small businesses that rely on its platform and using it to compete against them,” NAW CEO Eric Hoplin said in a news release, which was also said in the animated video. “Today, NAW is speaking up to say, ‘it’s time to level the playing field,’ and we urge Congress to restore fair economic competition and to protect Main Street businesses by passing S. 2992.”

See the video below:

The announcement went on to allege that Amazon has a history of using data from third-party sellers on its platform to create similar products that show up prominently in its marketplace, pushing the original business’ product deeper into the search results.

“This is blatantly unfair and leaves small businesses at a disadvantage when competing against Amazon,” the release states.

“The American Innovation and Choice Online Act will ensure a level playing field for third-party sellers and NAW members on Amazon’s marketplace,” said Alex Hendrie, NAW associate vice president for government relations. “It does not give third-party sellers a windfall or special advantage, nor does it break up Amazon or prohibit Amazon from selling their own products on their marketplace.”

NAW certainly isn’t alone in its calling for a reining in of Amazon’s marketplace practices regarding third-party sellers. On Sept. 14, the State of California sued Amazon and alleged that the online retailer’s contracts with sellers and wholesalers inflate prices, stifle competition and violate the state’s antitrust and unfair competition laws.

The lawsuit — announced by state Attorney General Rob Bonta — asks the San Francisco Superior Court to stop Amazon from continuing those alleged practices and ensure the company’s compliance. It also seeks $2,500 for each violation of California’s civil and professional code provided at trial, along with unspecified damages for harm to the state’s economy.

“Amazon coerces merchants into agreements that keep prices artificially high, knowing full well that they can’t afford to say no,” Bonta said in announcing the suit. “With other eCommerce platforms unable to compete on price, consumers turn to Amazon as a one-stop shop for all their purchases. This perpetuates Amazon’s market dominance, allowing the company to make increasingly untenable demands on its merchants and costing consumers more at checkout across California.”

Amazon issued a brief but direct response to the lawsuit, with a spokesperson stating that the company denies any antitrust violations. The company noted that a similar case in the District of Columbia was dismissed and said that Bonta has the issue backwards.

“Sellers set their own prices for the products they offer in our store,” the Amazon spokesperson said. “Like any store, we reserve the right not to highlight offers to customers that are not priced competitively.”

NAW echoed that message in its announcement, saying that many third-party sellers “view Amazon as a bully who is constantly strong-arming them and threatening to kick them off the platform,” adding that, for most sellers, there is no viable alternative marketplace for them to sell on if they are kicked off of Amazon’s.

“Amazon continues to grow its monopolistic power by acquiring grocery stores, healthcare facilities and so much more,” NAW’s news release said. “When is it going to be enough? How much longer until we live in the United States of Amazon?”

That lawsuit is arguably the biggest legal challenge in the U.S. for Amazon to date. In May 2021, the District of Columbia likewise sued the company for antitrust violations, and the Wall Street Journal noted that Amazon is currently under investigation by the Federal Trade Commission, the European Union and a congressional committee.

Related Posts

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.