The lawsuit alleges that Amazon and Apple created an illegal “horizontal agreement” that effectively excluded most third-party Apple resellers from the Amazon Marketplace.
A class action lawsuit alleges that Apple and Amazon conspired to artificially inflate the price of late-model iPhone and iPads sold on the e-commerce website.
According to CBS News, the complaint relates that Amazon, the world’s largest online electronics retailer, permits both the direct sale of Apple products and the third-party resale of other Apple devices.
Now, attorneys claim that, because neither Apple nor Amazon benefit from the third-party sale of Apple products, they have colluded to limit competition.
“Whenever a third-party merchant sells an iPhone on the Amazon Marketplace, that is an iPhone sale that neither Amazon (as a retailer) nor Apple (as a direct seller) will make,” the lawsuit states. “Vigorous competition from the third-party merchants exerts downward pressure on the online prices that both Apple and Amazon can charge for Apple products.”
The lawsuit suggests that the so-called “horizontal agreement” between the two companies has “eliminated nearly all Apple resellers on Amazon Marketplace.”
CBS News notes that only seven authorized Apple resellers remain on Amazon—down from a record-high of 600.
“By the outset of 2018, at least 600 third-party Apple resellers were active on the platform. And prices were falling as a result, with third-party merchants offering steep discounts—sometimes exceeding 20 percent—off the prices Apple charged on its own online store,” the class action notes.
Since the alleged agreement between Apple and Amazon was finalized in 2019, Apple has provided Amazon with products discounted at up to 10%.
The discount, lawyers say, is explicitly contingent on Amazon pushing third-party retailers off its marketplace.
“Pursuant to the Unlawful Boycott Agreement, Apple authorized just seven Apple resellers to sell on Amazon Marketplace in the United States,” the lawsuit says. “The remaining resellers (at least 600) had their Apple products removed from the platform by Amazon.”
The lawsuit alleges that consumers have paid the largest price, with Apple and Amazon effectively allowed to retail Apple products at whatever price point they determine best.
“With virtually all other Apple resellers eliminated from the platform, price competition deteriorated almost immediately,” the lawsuit says. “The steep discounts on Apple products that consumers once enjoyed on Amazon Marketplace eroded, with prices rising steadily.”
Prices on iPhones and iPads have purportedly risen by “more than 10 percent,” with the lawsuit citing consumer data from before and after the agreement was completed.
“This case is thus not about Apple independently selecting its trading partners or Amazon independently enforcing its own platform rules. It is about two horizontal competitors agreeing to eliminate the competitive threat posed by hundreds of other horizontal competitors,” the complaint states. “Erecting barriers to entry to keep competitors out and raising prices in the wake of their elimination is precisely the kind of conduct that Congress enacted antitrust laws to prevent and cannot be justified on procompetitive grounds.”