Amazon is being sued by the US government! Is there a solution to the vicious cycle of sellers' price wars?

Recently, the US government has taken action against Amazon! It has officially sued Amazon for illegally maintaining its monopoly! This lawsuit will directly focus on Amazon's overbearing terms for third-party sellers. We sellers will benefit a lot from this lawsuit!

The U.S. government's antitrust investigation into Amazon ended at the end of last year. When the results of the investigation were announced, they had actually confirmed Amazon's monopoly position and determined that Amazon had significant and lasting market dominance in the U.S. online retail market and had established a monopoly over third-party sellers in the market.

However, after the investigation, the corresponding means of prosecution and rectification have not been introduced. We sellers are also looking forward to it, waiting for the US government to take action to crack down on Amazon's unfair terms and give sellers some room to resist.

Finally, just yesterday, Washington DC Attorney General Karl Racine, on behalf of the Amazon Antitrust Investigation Team, officially sued Amazon on antitrust grounds, accusing Amazon of forcing or semi-forcing third-party sellers to offer the lowest prices on its platform in order to maintain its monopoly position.

In the lawsuit, the investigation team stated that until 2019, Amazon's third-party seller agreement had maintained a "price parity rule" that prohibited sellers from selling goods on other Amazon competitors' platforms at prices lower than those on Amazon. Although Amazon quietly modified and removed this rule 20 years ago under media pressure, it implemented another policy that was the famous "fair pricing policy" at the same time.

The US government believes that Amazon's "fair pricing policy" allows Amazon to punish sellers when it determines that the seller's pricing is unreasonable. The criteria for determination are entirely based on Amazon's interests and will also force sellers to sell on Amazon at the lowest price on the entire network.

Speaking of the "fair pricing policy", this is a very criticized unfair clause among sellers. It was used heavily during the epidemic last year, making sellers miserable.

When seeing the name "Fair Pricing Policy", some sellers will definitely be brought back to the early 2020 epidemic period.

At that time, due to the blockage of logistics and the suspension of production, all daily necessities in Amazon's inventory soared, and it was not uncommon for the prices to double. At this juncture, Amazon killed a large number of products with skyrocketing prices under the pretext of "fair pricing policy". It was directly stated to sellers that pricing practices that undermine customer trust violated Amazon's fair pricing policy. If the product and service prices set by sellers are significantly higher than the historical prices, the official will remove the listing at its discretion and not allow it to be sold.

Therefore, a fair pricing policy can prevent sellers from selling at too high a price in any scenario, even if the scenario is reasonable (extreme out-of-stock situation). This is also one of the main reasons why the US government believes that Amazon has a monopoly.

The lawsuit has been accepted by the court, and the trial process will be announced in the near future. According to the past achievements of the antitrust team, it is still difficult for Amazon to win the case. Losing the case means a major overhaul or even cancellation of the fair pricing policy. Amazon will no longer be able to punish sellers on the grounds of pricing. The punishment here does not only include removing products from the shelves. Limiting traffic and not pushing products are actually a kind of high pricing punishment. From this point of view, the impact is too great. Even weakening the negative impact of pricing factors on rankings and displays can bring a new way of playing to sellers' profit positioning, and the vicious cycle of low-price sales and price wars may find a new way out.

Therefore, the result of this trial will have a profound impact on sellers, definitely no less than the last time the Amazon union was established!