Court filings reveal that when Amazon and a rival “price match,” someone in the chain agrees to raise the price so both can safely match at a more expensive levels.
California Attorney General Rob Bonta just exposed something most shoppers suspected but couldn’t prove: Amazon actively coordinates with competitors to raise prices.
In February 2026, Bonta filed for a preliminary injunction with evidence that flips the “Amazon saves you money” narrative on its head. According to documents filed with the court, when Amazon and a competitor price-match, “either Amazon or the competitor agrees, through their common vendor, to increase the retail price” so both can match higher prices.
Bonta put it plainly: “Amazon’s ‘cheap’ prices are the result of intimidation and illegality that drove up prices for consumers across the marketplace.”
The Deception: Removing the Policy While Enforcing It
Amazon made headlines in March 2019 when it publicly eliminated its “Price Parity Provision” from seller contracts. The move earned positive press coverage and positioned Amazon as responsive to competitive concerns.
Internal documents tell a different story.
An internal Amazon memo stated: “despite the recent removal of the price parity clause in our BSA…our expectations and policies have not changed.” Another Amazon Director noted that expanded penalties “may generate pushback given recent positive press about our change to remove the previous price parity clause.”
Amazon publicly claimed to stop enforcing price parity while continuing to do exactly that.
The company simply shifted from explicit contract language to enforcement through penalties and algorithmic suppression.
How the Coercion Works
Amazon’s mechanism is straightforward: sellers who offer lower prices elsewhere face immediate consequences.
According to California’s complaint, merchants must either match Amazon’s pricing demands or face “drastic penalties like loss of the ‘Buy Box’ on Amazon” or requirements to “compensate” Amazon if other stores lower prices.
The penalties escalate quickly:
- Loss of the Buy Box (where 82% of Amazon sales occur)
- Suppressed product listings
- Reduced visibility in search results
- Account suspension or termination
Sellers must agree not to offer lower prices on “competing sites like Walmart, Target, eBay, and, in some cases, even on their own websites.”
For most third-party sellers, Amazon represents their primary sales channel. Losing Buy Box placement or facing account suspension means losing their business.
The Numbers Behind the Leverage
Amazon’s coercion works because of overwhelming market dominance.
The company controls 37.6% of the U.S. e-commerce market as of 2023. That’s nearly six times larger than its closest competitor Walmart at 6.3%.
Third-party sellers account for approximately 59% of all Amazon sales. On average, these sellers pay Amazon fees equal to 30-40% of their revenues.
When one platform controls that much market access and extracts that much revenue, sellers have no negotiating power.
Amazon knows this. The company leverages its position to dictate pricing across the entire e-commerce ecosystem.
The Vicious Cycle That Hurts Everyone
California’s complaint explains how Amazon’s practices create a harmful feedback loop: “Amazon keeps raising fees, leading to higher prices on Amazon, leading to higher prices off Amazon due to price parity—a vicious anticompetitive cycle in which Amazon wins” while consumers pay more everywhere.
Without price competition, “prices artificially stabilize at levels higher than would be the case in a competitive market.”
Bonta emphasized the consumer impact: “Many of the products we buy online would be cheaper if market forces were left unconstrained.”
Here’s the cycle in practice:
- Amazon raises seller fees
- Sellers increase prices on Amazon to cover higher fees
- Amazon’s algorithms detect lower prices on other platforms
- Sellers face penalties unless they raise prices everywhere
- Consumers pay more on Amazon, Walmart, Target, and seller websites
- Amazon raises fees again
The system is designed to eliminate price competition entirely.
Buy Box Suppression Backfired—But Not How Amazon Expected
Internal Amazon documents from 2017 revealed that Buy Box suppression “has not led Sellers to lower their prices” and “has not motivated Sellers to reduce prices.”
Instead, sellers maintained higher prices everywhere. They kept prices high on their own websites, maintained elevated prices on other marketplaces, and brands began charging higher wholesale prices to other retailers.
An internal Amazon memo documented that “the Brand team has received complaints that this policy encourages Sellers to raise their prices on competitor websites.”
Amazon’s enforcement mechanism didn’t create lower prices. It created uniformly higher prices across all channels.
Federal Authorities Join the Fight
California isn’t fighting alone. In September 2023, the Federal Trade Commission and 17 states filed a separate federal antitrust lawsuit against Amazon. The court allowed the case to proceed in September 2024.
FTC Chair Lina Khan stated the lawsuit seeks to “hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
The FTC alleges Amazon “is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers.”
What Happens Next
California’s trial is expected to start in January 2027. Bonta’s preliminary injunction seeks to halt Amazon’s alleged price-fixing scheme while the case proceeds.
Most evidence in the filing remains redacted from public view, but Bonta is working to release additional documents.
The outcome will reshape e-commerce pricing structures. If California prevails, sellers could offer genuinely competitive prices across platforms. If Amazon wins, the current system continues.
For retailers and brands selling on Amazon, the implications are immediate. The lawsuit exposes the mechanisms behind pricing constraints you’ve likely experienced but couldn’t formally challenge.
The case reveals what many suspected: Amazon’s “low prices” come at the cost of eliminating price competition everywhere else.
E-commerce pricing will look dramatically different in five years. Whether that means lower prices for consumers or continued dominance by a single platform depends on how courts rule on these anticompetitive practices.
The evidence suggests Amazon built a system in which everyone pays more, disguised as marketplace management, so Amazon can maintain control.
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