American e-commerce giant Amazon.com’s (AMZN) D.C. antitrust lawsuit was revived by an appeals court in Washington, D.C. yesterday. The case alleges that Amazon uses unfair pricing tactics that illegally thwart competition. Amazon is accused of suppressing its suppliers and third-party sellers on its online platform.
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Amazon Accused of Unfair Practices
The case, filed in May 2021, accused Amazon of threatening to ban sellers from offering products on rival websites or risk losing listing on its platform. Allegedly, sellers are sometimes even barred from offering products on their own websites at prices lower than Amazon.
The retailer is also said to be suppressing wholesalers with unlawful pricing tactics. Amazon enjoys a minimum profit guarantee under its agreements with wholesalers. If Amazon offers additional discounts to stay competitive, the wholesaler must bear the difference between the revised price and the agreed minimum.
In response to the reopening of the case, Amazon’s spokesperson stated that the retailer was simply following a competitive pricing mechanism to ensure customers get a fair deal on their purchases and sellers also benefit from continued sales. The retailer is determined to prove that it follows good practices in the interest of both consumers and sellers. Meanwhile, Amazon is trying to dismiss a similar lawsuit from September 2023, brought by the U.S. Federal Trade Commission (FTC) and 17 states.
Website Traffic Hints at Amazon’s Growing Business
Aside from the e-commerce platform, Amazon’s other businesses, such as AWS and advertising services, are also growing well as depicted by rising website visits. According to TipRanks’ Website Traffic tool, the total estimated visits to all of Amazon’s apps and websites worldwide increased 22.16% in the year-to-date period compared to last year.
Is Amazon a Buy, Sell, or Hold Stock?
AMZN commands a Strong Buy consensus rating on TipRanks. This is based on 41 Buys and one Hold rating received in the past three months. The average Amazon.com price target of $223.58 implies 26.9% upside potential from current levels. Shares have gained 15.9% so far this year.
