California has sued Amazon as of Wednesday over allegations of violating antitrust and unfair competition laws, The Wall Street Journal wrote.
The state is saying the eCommerce titan’s contracts with third party sellers and wholesalers make prices higher, shut down competition and violate the aforementioned laws.
Third party merchants selling on Amazon make up the lion’s share of the company’s product sales. Amazon allegedly makes them sign agreements that penalize them for offering products for lower prices on competing sites. If the companies don’t comply, the lawsuit alleges they get pushed lower in the Amazon search results or could be disqualified in the site’s “buy box.” They also could get suspended or removed.
Attorney General Rob Bonta said the lawsuit was looking to stop Amazon policies that could prevent merchants from offering lower prices through competitors’ websites. The suit says the court should block Amazon from continuing those policies and add a monitor to look after the company’s compliance in the future. It will also seek damages for harm to the state economy and $2,500 for every violation proved in court.
This is reportedly the biggest legal challenge Amazon has ever faced. And because of its economy size and population, California’s business regulations have often changed how companies operate in the entire country.
Amazon has also seen scrutiny over some of its acquisitions, including the FTC looking into its takeover of robot vacuum maker iRobot, PYMNTS wrote.
Read more: FTC Begins Review of $1.7B Amazon-iRobot Deal
The iRobot review is reportedly “wide-ranging” and will look both at head-to-head competition along with whether the deal would illegally add to Amazon’s market share in the connected device market and general retail.
The deal was announced in August. The Roomba robot vacuum is the biggest iRobot product. Amazon has made other additions to its devices like speakers, home security doorbells and cameras, and adding vacuums to the mix could give it even more of an advantage.