Amazon is facing three class-action lawsuits accusing the firm of conspiring over the past decade to illegally fix the prices on goods sold online in Canada.
The lawsuits accuse the firm of price-fixing by making any business using its platform to sell their products agree not to sell them for lower prices elsewhere. The suits seek combined damages of over $12 billion. The lawsuits come as Amazon is under investigation by the federal Competition Bureau for its relationship with businesses that sell on its platform, and as it faces scrutiny from regulators around the world over its alleged anti-competitive practices.
Talking Point
The class-action lawsuits, which claim illegal price-fixing going back a decade, come as Amazon is facing investigations from regulators in Canada and around the world regarding its relationship with businesses that sell on its platform. The federal Competition Bureau is investigating Amazon and could fine it up to $10 million. These lawsuits claim combined damages of over $12 billion.
The three lawsuits—Sweet v. Amazon, filed in Ontario Superior Court in May; Difederico v. Amazon, filed in Federal Court in April; and Wells v. Amazon, filed in Quebec Superior Court in April—are in their early stages, and have not yet been certified as class actions. They vary slightly from each other, but all focus on Amazon’s agreements with those independent businesses, which the company calls third-party sellers.
“These agreements unlawfully restricted price competition by all sellers of products on Amazon’s platform and other e-commerce websites,” reads the Federal Court lawsuit. “The cost to Canadian consumers from Amazon’s anticompetitive agreements has been staggeringly high – upwards of CAD $12 billion.” None of the allegations in the lawsuits have been proven in court.
Amazon got rid of the provision barring third-party sellers from offering their products elsewhere at lower prices in Europe back in 2013 after Germany and the U.K. launched investigations. It dropped the practice in the U.S. in March 2019, after a U.S. senator called for an antitrust investigation. The Quebec lawsuit called that move “a tacit admission of its wrongdoing.”
Amazon Canada declined The Logic’s request for comment, saying it: “does not comment on active litigation.” In a regulatory filing responding to the Quebec and federal court cases, Amazon wrote that it disputed the allegations and intended to defend itself.
Amazon has hired Borden Ladner Gervais (BLG) to represent it in the Quebec case, according to Jean-Michel Boudreau, the lawyer representing the plaintiff. BLG declined to comment. Boudreau’s suit claims that although Amazon pulled the precise language requiring price parity in March 2019, it still ensures companies that sell on its platform don’t sell for less money elsewhere by getting them to agree to similar language that accomplishes the same purpose.
“Without the threat of price competition outside of Amazon’s platform, Amazon and third-party sellers are not compelled to lower prices on Amazon’s platform in response to competitive pressure from e-commerce sales from other platforms or websites, and the Amazon platform prices remain inflated,” reads the Quebec suit.
Amazon is facing a number of investigations around the world regarding its relationship with companies that sell on its platform. The European Commission is looking into the firm, as are the attorneys general of California and New York. In July, a U.S. congressional committee pressed Amazon CEO Jeff Bezos on whether his firm used seller data from independent firms to guide how it prices its own products. “We continue to look into that very carefully. I’m not yet satisfied that we’ve gotten to the bottom of it,” said Bezos.
Doug Lennox, the lawyer representing the plaintiff in the Ontario case, sees the class-action lawsuits as part of that broader international effort. “There are real concerns here of Amazon having excessive market power and ever increasing market power,” said Lennox.
“People like Senator Elizabeth Warren in the United States have long called for action and the use of competition law to correct these imbalances and we, in our small way in Canada with this lawsuit, are trying to contribute to that.”
The Competition Bureau investigation, which was announced after all three lawsuits were filed, focuses on Amazon’s potential “abuse of dominance” of the e-commerce market in Canada. The bureau can impose a penalty of $10 million in the first instance, followed by $15 million for any additional instances. The class-action lawsuits cite a variety of data that appears to show Amazon has a massive market share in Canada. “Almost 50 percent of e-commerce retail purchases in Canada are made by consumers who purchase products from the Amazon platform,” reads the Quebec suit. The Ontario suit states Canadians purchased US$4.7 billion worth of goods on Amazon in 2018.
Competition Bureau spokesperson Jayme Albert said the bureau has not provided any information to people involved in the class actions, but declined to say if they’ve received information.
“The Competition Bureau is required by law to conduct its work confidentially, including investigations and the receipt and handling of complaints,” said Albert. “For this reason, I’m unable to confirm whether the Bureau has received any information from parties involved with the class actions.”
Boudreau is working on a revised statement of claim, which he’s looking to finalize by the end of the month, after which Amazon will have a chance to respond. A scheduling hearing in the Ontario case is scheduled for Tuesday.
With files from Caroline Mercer
