throbber
Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 1 of 94
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`The Honorable Richard A. Jones
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`No. 20-cv-00424-RAJ
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`FIRST AMENDED CLASS ACTION
`COMPLAINT
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`DEMAND FOR JURY TRIAL
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`DEBORAH FRAME-WILSON, CHRISTIAN
`SABOL, SAMANTHIA RUSSELL, ARTHUR
`SCHAREIN, LIONEL KEROS, NATHAN
`CHANEY, CHRIS GULLEY, SHERYL
`TAYLOR-HOLLY, ANTHONY COURTNEY,
`DAVE WESTROPE, STACY DUTILL,
`SARAH ARRINGTON, MARY ELLIOT,
`HEATHER GEESEY, STEVE MORTILLARO,
`CHAUNDA LEWIS, ADRIAN HENNEN,
`GLENDA R. HILL, GAIL MURPHY,
`PHYLLIS HUSTER, and GERRY
`KOCHENDORFER, on behalf of themselves
`and all others similarly situated,
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`AMAZON.COM, INC., a Delaware
`corporation,
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`Plaintiffs,
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`Defendant.
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`v.
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`
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`FIRST AMENDED CLASS ACTION COMPLAINT
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
`
`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`

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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 2 of 94
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`TABLE CONTENTS
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`Page
`INTRODUCTION ...............................................................................................................1 
`A. 
`Summary of Allegations ..........................................................................................1 
`B. 
`Identity of Class Products ......................................................................................16 
`C. 
`The Economic Impact of Amazon’s Anticompetitive Conduct .............................17 
`JURISDICTION ................................................................................................................19 
`VENUE ..............................................................................................................................20 
`PARTIES ...........................................................................................................................20 
`A. 
`Plaintiffs .................................................................................................................20 
`1. 
`Virginia ......................................................................................................20 
`2. 
`California ...................................................................................................21 
`3. 
`Alabama .....................................................................................................22 
`4. 
`Arizona .......................................................................................................23 
`5. 
`Arkansas .....................................................................................................24 
`6. 
`Florida ........................................................................................................25 
`7. 
`Illinois ........................................................................................................25 
`8. 
`Iowa............................................................................................................26 
`9. 
`Maine .........................................................................................................26 
`10. 
`Nevada .......................................................................................................27 
`11. 
`New Hampshire .........................................................................................27 
`12. 
`Pennsylvania ..............................................................................................28 
`13. 
`Tennessee ...................................................................................................29 
`14. 
`Texas ..........................................................................................................29 
`15. 
`Utah ............................................................................................................31 
`16. 
`Vermont .....................................................................................................31 
`17.  Washington ................................................................................................32 
`18.  Wisconsin ...................................................................................................33 
`
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`
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`I. 
`
`II. 
`III. 
`IV. 
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`FIRST AMENDED CLASS ACTION COMPLAINT - i
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 3 of 94
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`2. 
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`3. 
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`4. 
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`B. 
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`C. 
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`D. 
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`E. 
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`F. 
`
`G. 
`
`Defendant ...............................................................................................................33 
`B. 
`STATEMENT OF FACT ..................................................................................................34 
`A. 
`Background ............................................................................................................34 
`Amazon charges high fees that third-party sellers pass on to
`1. 
`their customers both on and off the Amazon.com platform. .....................35 
`Amazon’s pricing policies stifle ecommerce price
`competition. ...............................................................................................41 
`Amazon’s price restraint is just one example by which it
`exploits its market power to deny third-party sellers a fair
`opportunity to compete. .............................................................................45 
`Amazon’s agreement with its third-party sellers causes
`higher prices on its outside competitors’ sites. ..........................................48 
`Amazon’s two million third-party sellers agreed under Amazon’s
`former PMFN not to offer their products to U.S. customers at a
`lower price through any competing retail ecommerce channels. ...........................51 
`Amazon’s two million third-party sellers agree under Amazon’s
`current “fair pricing” provision that selling at a lower price through
`competing retail ecommerce channels will subject them to costly
`penalties. ................................................................................................................51 
`Amazon’s former PMFN and current “fair pricing” provision
`reduce price competition and cause consumers to pay more. ................................52 
`Amazon has a monopoly in the retail ecommerce market or
`minimally in several categories of goods. ..............................................................56 
`Alternatively, Amazon has attempted to monopolize the general
`retail ecommerce market. .......................................................................................60 
`Amazon is the subject of a government investigation for possible
`antitrust violations, including whether it uses its relationship with
`its third-party sellers to harm competition. ............................................................61 
`INTERSTATE TRADE AND COMMERCE ...................................................................63 
`VI. 
`VII.  RELEVANT MARKET.....................................................................................................63 
`VIII.  CLASS ACTION ALLEGATIONS ..................................................................................73 
`IX. 
`ANTITRUST INJURY ......................................................................................................77 
`X. 
`CAUSES OF ACTION ......................................................................................................78 
`FIRST CAUSE OF ACTION VIOLATION OF THE SHERMAN ACT
`(15 U.S.C. § 1) PER SE .....................................................................................................78 
`
`V. 
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`FIRST AMENDED CLASS ACTION COMPLAINT - ii
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 4 of 94
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`SECOND CAUSE OF ACTION VIOLATION OF 15 U.S.C. § 1
`(ALTERNATIVE TO PER SE) .........................................................................................80 
`THIRD CAUSE OF ACTION VIOLATION OF THE SHERMAN ACT –
`MONOPOLIZATION (15 U.S.C. § 2) ..............................................................................82 
`FOURTH CAUSE OF ACTION VIOLATION OF THE SHERMAN ACT –
`ATTEMPTED MONOPOLIZATION (15 U.S.C. § 2) .....................................................84 
`FIFTH CAUSE OF ACTION VIOLATIONS OF STATE ANTITRUST AND
`RESTRAINT OF TRADE LAWS AND CONSUMER PROTECTION
`STATUTES........................................................................................................................85 
`SIXTH CAUSE OF ACTION UNJUST ENRICHMENT (Applies To All States
`Except Alaska, Delaware, Florida, Georgia, Idaho, Kentucky, Michigan,
`Mississippi, New Jersey, New York, And Ohio) ...............................................................87 
`JURY TRIAL DEMANDED .........................................................................................................87 
`PRAYER FOR RELIEF ................................................................................................................88 
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`FIRST AMENDED CLASS ACTION COMPLAINT - iii
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 5 of 94
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`Plaintiffs allege the following upon personal knowledge as to themselves and their own
`acts, and as to all other matters upon information and belief, based upon the investigation made
`by and through their attorneys and experts in the field of antitrust economics.
`I.
`INTRODUCTION
`
`A.
`
`Summary of Allegations
`1.
`Amazon.com, Inc. (“Amazon”) has many competitive advantages over the third-
`party sellers, with whom it competes in the sale of goods on the Amazon.com platform. One
`critical advantage is the absence of seller and advertising fees that it charges them to compete on
`its platform. These fees add significantly to third-party sellers’ cost of doing business on
`Amazon’s platform and substantially reduce the price competition Amazon faces from them on
`its own platform. As if that were not enough, Amazon abuses the power of its marketplace
`platform by restraining its third-party sellers from competing on any other website or competing
`ecommerce channel at a lower price—even when they incur no seller fees and could profitably
`sell their goods at significantly lower prices. This illegal restraint on competition is precisely
`what the antitrust laws are intended to combat.
`2.
`Amazon is “the world’s largest online retailer.”1 Its market valuation recently rose
`to $1.5 trillion, “more than that of Walmart, Target, SalesForce, IBM, eBay, and Etsy
`combined.”2 Sales on Amazon’s website, through its app or voice control devices (collectively
`referred to as the “Amazon.com platform”) account for almost half of all retail ecommerce in the
`United States.3 Amazon’s nine closest competitors have a distant 1.1%-6.6% share of the retail
`ecommerce market.4 Amazon operates as retailer, selling directly to its customers. It also
`
`
`1 Declaration of Ella Irwin, Director of Marketplace Abuse at Amazon (Jul. 13, 2018),
`Kangaroo Mfg., Inc. v. Amazon.com, Case No. 17-cv-1806SPL (D. Ariz.), Dkt. No. 75 (“Irwin
`Decl.”), ¶ 2.
`2 Press Release (Jul. 29, 2020)
`https://judiciary.house.gov/news/documentsingle.aspx?DocumentID=3199.
`3 Amazon Now Has Nearly 50% of US Ecommerce Market, Emarketer (Jul. 16, 2018),
`https://www.emarketer.com/content/amazon-now-has-nearly-50-of-us-ecommerce-market.
`4 Id.
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 1
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 6 of 94
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`operates what some economists call a “two-sided platform,” meaning that it provides services to
`two different groups (here third-party sellers and their customers) who both depend on the
`Amazon platform to intermediate between them.5 As a retail seller, Amazon sells approximately
`12 million products on the Amazon.com platform, covering a wide range of consumer goods.6
`Amazon’s products and customers overlap with those of its third-party sellers, whom it permits
`for a fee to register with Amazon Marketplace to sell their products on the Amazon.com platform
`within the same categories of consumer goods that Amazon itself offers for sale.7 As an example,
`Amazon sells Apple watches on the Amazon.com platform, while at the same time an Amazon
`third party seller, like Adorama, may also sell the same product on the Amazon.com platform.
`Nicholas Denissen, Amazon’s Vice President of Marketplace Business, describes the
`Amazon.com platform as “an online marketplace where millions of third-party sellers” sell their
`goods.8 This arrangement gives sellers access to millions of buyers and buyers access to millions
`of sellers.9 He likens it to “an online mall where independent merchants display their products to
`people perusing the website.”10
`3.
`Amazon drives consumers to its platform with the lure of low prices, but in fact, it
`suppresses competition from its third-party sellers on external platforms, where they would
`otherwise competitively price their goods at a lower price.11
`
`
`5 See Ohio v. American Express Co., ___U.S.___ , 138 S. Ct. 2274, 2276-77 (2018).
`6 How many products does Amazon carry? 360pi (May 2016),
`https://0ca36445185fb449d582-f6ffa6baf5dd4144ff990b4132ba0c4d.ssl.cf1.rackcdn.com/
`IG_360piAmazon_9.13.16.pdf.; Amazon store directory, https://www.amazon.com/gp/site-
`directory?ref_=nav_em_T1_0_2_2_36__fullstore.
`7 Irwin Decl., ¶ 5.
`8 Declaration of Nicholas Denissen, Amazon’s Vice President of Marketplace Business (Jun.
`30, 2017), Oberdorf v. Amazon.com, Case No. 16-cv-1127MWB (M.D. Pa.), Dkt. No. 31
`(“Denissen Decl.”), ¶ 5.
`9 Id.
`10 Id.
`11 See infra Sec. I(C).
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 2
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
`
`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 7 of 94
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`4.
`Amazon enforces its price restraint by contract. When a seller registers with
`Amazon Marketplace, “it agrees to the terms of the Amazon Services Business Solutions
`Agreement (BSA) and the policies incorporated in that agreement.12 The BSA establishes rules
`for selling on the Amazon.com platform, and any seller holding an Amazon Seller Account must
`adhere to them.13 It costs less to sell on the sellers’ own websites and other third-party
`marketplaces, and in a competitive market third-party sellers would sell their products at lower
`prices on other platforms because their cost structure allows them to do so. But the BSA prevents
`them from offering a competitive price on external platforms.
`5.
`Amazon continues to enforce its anticompetitive restraint of third-party sellers to
`this day, although it now relies on a different contractual provision than it did before March
`2019. Until then, the BSA included an express “price parity” (i.e., platform most favored nation
`or “PMFN”) provision, governing the price of products the seller offered for sale through its or
`any of its affiliates’ other retail channels other than physical stores. 14 The PMFN required that
`sellers:
`
`maintain parity between the products you offer through Your Sales
`Channels and the products you list on any Amazon Site by
`ensuring that … the purchase price and every other term of sale …
`is at least as favorable to Amazon Site users as the most favorable
`terms via Your Sales Channels (excluding consideration of
`Excluded Offers).[15]
`6.
`Amazon’s PMFN clause restrains competition by forcing its third-party sellers to
`sell their products on external platforms at uncompetitive prices equal to or higher than the
`seller’s listing on the Amazon.com platform. Last March, under threat of a Federal Trade
`Commission (FTC) investigation, Amazon officially withdrew its PMFN provision.16 But
`
`
`12 Irwin Decl., ¶ 4.
`13 Amazon Pricing Policy, Feedadvisor, https://feedvisor.com/university/amazon-pricing-
`policy/.
`14 Irwin Decl., Ex. A at 14 (definition) and 18 (section S-4 Parity with Your Sales Channel).
`15 Id., Ex. A at 18.
`16 See, e.g., Greg Magana, Amazon is ending its restrictive pricing practice, Business Insider
`(Mar. 13, 2019), https://www.businessinsider.com/amazon-ends-restrictive-pricing-parity-2019-3.
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 3
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Amazon continues to enforce this very price fixing agreement under its “fair pricing”
`provision.17 Amazon’s “fair pricing” policy states that “Amazon regularly monitors the prices of
`items on our marketplaces,” and that if it sees “pricing practices” on the Amazon.com platform
`“that harm[] customer trust, Amazon can remove the Buy Box [i.e., the coveted one-click-to-buy
`button18], remove the offer, suspend the ship option, or, in serious or repeated cases, suspend[] or
`terminat[e] selling privileges.”19 One of the pricing practices Amazon identifies as “harmful” to
`customer trust is “[s]etting a price on a product or service that is significantly higher than recent
`prices offered on or off Amazon.”20
`7.
`Amazon’s “fair pricing” provision merely reiterates the requirement of its former
`PMFN. Both require Amazon third-party sellers to maintain equal or higher prices on other
`platforms or lose privileges on the Amazon.com platform. Under the “fair pricing” provision,
`“[a]ny single product or multiple products packages must have a price that is equal to or lower
`than the price of the same item being sold by the seller on other sites or virtual marketplaces.”21
`The “fair pricing” provision “applies to both the individual product price as well as the collective
`price that the item or items are being sold for.”22 Third-party sellers receive “price alerts” with a
`warning from Amazon that show the product, the price on Amazon and the price found
`elsewhere on the web without identifying the competing website.23 The outcome is the same both
`
`
`17 See, e.g., Guadalupe Gonzalez, You’re No Longer Required to Sell Products for Less on
`Amazon. The Problem? If You Don’t, You’ve Got Another Penalty Coming,
`https://www.inc.com/guadalupe-gonzalez/amazon-removes-price-parity-not-fair-price-rule-third-
`party-sellers-antitrust-violations.html.
`18 Infra ¶¶ 86-87.
`19 Amazon Marketplace Fair Pricing Policy, Amazon Seller Central,
`https://sellercentral.amazon.com/gp/help/external/G5TUVJKZHUVMN77V?language=
`en_US&ref=efph_G5TUVJKZHUVMN77V_cont_521.
`20 Id. (emphasis added).
`21 Amazon Pricing Policy, Feedadvisor, https://feedvisor.com/university/amazon-pricing-
`policy/.
`22 Id.
`23 Spencer Soper, Amazon Squeezes Sellers That Offer Better Prices on Walmart, Bloomberg
`(Aug. 5, 2019) https://www.bloomberg.com/news/articles/2019-08-05/amazon-is-squeezing-
`sellers-that-offer-better-prices-on-walmart.
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 4
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
`
`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 9 of 94
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`under the PMFN clause and under the “fair pricing” provision: both have “the effect of getting
`sellers to raise prices elsewhere, rather than risk lower revenue from Amazon.”24
`8.
`Amazon’s agreement with its third-party sellers is an impermissible restraint on
`price between market participants who perform the same marketplace function. Amazon, the
`“Everything Store,” is a current or potential competitor with all of its third-party sellers. It
`designed its platform so that many “sellers, in addition to Amazon, may list the same product for
`sale from a single product page on” the Amazon.com platform.25 All sellers may “compete for
`the Buy Box, which is awarded to the best performing seller. Amazon may win the Buy Box like
`any other seller.”26 In his April 11, 2019 letter to investors, Amazon CEO, Jeff Bezos,
`emphasized Amazon’s competitive relationship with its “independent sellers,” who “compete
`against our first-party [retail] business.”27 He compared the extraordinary growth of Amazon’s
`“first-party business,” from “$1.6 billion in 1999 to $117 billion” in 2018, with the even more
`remarkable growth of “third-party sales,” which grew “from $0.1 billion to $160 billion” in
`2018.28 He bluntly concluded: “Third-party sellers are kicking our first party butt. Badly.”29
`9.
`On and off the Amazon.com platform, Amazon competes with its third-party
`sellers as ecommerce retailers in the sale of the same or competing goods. For example, Amazon
`competes with Amazon third-party seller Adorama, not only when it sells on the Amazon.com
`platform, but also when Adorama sells on its own website and through Walmart.com, eBay, and
`Newegg. In keeping with the previous example, when Adorama prices an Apple watch for sale
`on the Amazon.com platform, it must take into account the seller fees associated with Amazon’s
`
`
`24 Nick Statt, Amazon price alerts are leading sellers to raise prices on Walmart or risk
`losing perks, The Verge,(Aug. 5, 2019), https://www.theverge.com/2019/8/5/20755342/amazon-
`marketplace-antitrust-sellers-raise-prices-walmart-competition-ftc.
`25 Irvin Decl., ¶ 3.
`26 Irvin Decl., ¶ 13.
`27 https://www.sec.gov/Archives/edgar/data/1018724/000119312519103013/
`d727605dex991.htm.
`28 Id.
`29 Id.
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 5
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 10 of 94
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`platform. Even though it can sell the same watches profitably at a lower price on other platforms,
`Adorama must raise the price of these watches on Walmart.com, eBay, Newegg and its own
`website to comply with Amazon’s price restraint. If it prices the watch lower on any of these
`other platforms, it loses selling privileges with Amazon.
`10.
`Adorama is not unique. Eighty percent of Amazon’s third-party sellers also sell
`their products on other online retail websites that compete with the Amazon.com platform, most
`commonly on eBay, their own websites, or Walmart.30
`
`
`11.
`Each of these sellers must price their products on other websites based on the high
`cost of selling on the Amazon.com platform, rather than setting competitive prices
`commensurate with lower-cost platforms.
`12.
`Amazon injures consumers by driving up the price of consumer goods. This is
`most evident in the case of goods sold on the third-party sellers’ own websites, where they incur
`no sellers’ fees. For example, Amazon third-party seller Molson Hart reports that a $150 item
`
`
`30 Rani Molla & Jason Del Rey, A fifth of professional Amazon merchants sell more than $1
`million a year — double the share from last year, Vox (May 23, 2018), https://www.vox.com/
`2018/5/23/17380088/amazon-sellers-survey-third-party-marketplace-walmart-ebay; Catie
`Grasso, The State of the Amazon Marketplace 2019, Feedadvisor, (May 15, 2019),
`https://feedvisor.com/resources/amazon-trends/the-state-of-the-amazon-marketplace-2019/.
`FIRST AMENDED CLASS ACTION COMPLAINT - 6
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`sold on Amazon would make his company the same profit as an item sold for $37 less on his
`company website:
`We designed, manufactured, imported, stored, shipped the item,
`and then we did customer service. Amazon hosted some images,
`swiped a credit card, and got $40 [for a $150 toy].
`This is the core problem. Were it not for Amazon, this item would
`be $40 cheaper. And this is how Amazon’s dominance of the
`industry hurts consumers.[31]
`13.
`Amazon’s restraint also prevents its third-party sellers from dropping prices on
`other third-party platforms with lower fees. For example, Amazon’s third-party sellers incur
`considerably lower fees when selling on Amazon’s nearest competitor, eBay. As the following
`examples illustrate, all in Amazon charges its third-party seller about 23% to sell a $30 book,
`while eBay charges 16%, and it charges its third-party seller 31% to sell a $15 DVD, while eBay
`charges 21% to sell on its platform:32
`
`
`31 Molson Hart, How Amazon’s Business Practices Harm American Consumers: Why
`Amazon Needs a Competitor and Why Walmart Ain’t It, Medium,
`https://medium.com/swlh/amazon-needs-a-competitor-and-walmart-aint-it-5997977b77b2.
`32 Max Godin, Selling on Amazon vs eBay – Discover Which is Better and Why, Crazylister
`(May 15, 2018), https://crazylister.com/blog/selling-on-amazon-vs-ebay/.
`FIRST AMENDED CLASS ACTION COMPLAINT - 7
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
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`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 12 of 94
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`14. Walmart operates its own competing online marketplace platform. Many of
`Amazon’s third-party sellers also sell there and incur fewer fees. For example, an account
`manager—a free service on Walmart—costs $1600 per month + 0.3% of total sales on Amazon,
`
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`FIRST AMENDED CLASS ACTION COMPLAINT - 8
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
`
`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 13 of 94
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`capped at $5,000 per month.33 Amazon added this service (and the additional fee) to address the
`often-cited complaint from its third-party sellers that Amazon’s largely faceless organization
`makes it impossible for them to navigate glitches and changing rules.34 About 94% of third-party
`sellers rely on storage, packaging and delivery by Amazon (Fulfillment by Amazon or FBA), and
`until this year, Walmart had no equivalent of this service.35 One non-service-related cost to FBA
`sellers is a $0.20 per unit charged to provide individual sku stickers—otherwise Amazon will
`store a seller’s products with other sellers’ inventory, and “if other sellers have sent in a
`counterfeit product or used-condition product that they are trying to pawn off as a new-condition
`product, now the new seller may get itself into trouble with Amazon for selling a problematic
`product to a customer even if it was technically not their product.”36 Walmart has no equivalent
`fee.
`
`15.
`Since 2014, Amazon began charging its third-party sellers optional advertising
`fees to ensure that their products show up when customers search for their products on the
`Amazon.com platform. For consumers, that means that advertising influences search results
`more than relevance; for third-party sellers, it means higher selling costs. For example, Amazon
`charged its third-party seller, Molson Hart, $763,000 for advertising and commissions in 2018:
`In exchange for this $763,000, they operate an online catalog and
`deliver search results. We sell about 200 products on Amazon.
`
`
`33 Strategic Account Services-Core, Amazon, https://sell.amazon.com/programs/paid-
`services.html?ref_=asus_soa_rd&.
`34 Hillary Milnes, Amazon is chasing growth and shifting resources to third-party sellers,
`Digiday (Jan. 31, 2019), https://digiday.com/marketing/amazon-chasing-growth-shifting-
`resources-third-party-sellers/.
`35 David Hamrick, Amazon FBA vs FBM Comparison Guide, Jungle Scout (Mar. 4, 2020),
`https://www.junglescout.com/blog/amazon-fba-vs-fbm/ ; Melissa Repko, Walmart steps up
`competition with Amazon by fulfilling orders for third-party vendors, CNBC (Feb. 25, 2020),
`https://www.cnbc.com/2020/02/25/walmart-wants-to-make-it-easier-for-third-party-
`vendors.html.
`36 James Thompson, Amazon Selling Pitfalls Even the Savviest Sellers Forget , Big
`Commerce, https://www.bigcommerce.com/blog/amazon-selling-pitfalls-problems/#fulfillment-
`by-amazon.
`
`FIRST AMENDED CLASS ACTION COMPLAINT - 9
`Case No. 20-cv-00424-RAJ
`010888-11/1331636 V1
`
`1301 SECOND AVENUE, SUITE 2000, SEATTLE, WA 98101
`206.623.7292 206.623.0594 FAX
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`Case 2:20-cv-00424-RAJ Document 15 Filed 08/03/20 Page 14 of 94
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`Does it cost anywhere near $763,000 to display our products there?
`Definitely not.[37]
`16. Walmart’s on-platform advertising service, which just began this year, is neither
`as extensive as Amazon’s nor, because of the relatively small number of sellers and products, as
`necessary to make sellers’ products visible.38 Amazon’s third-party sellers could therefore
`profitably lower their prices on Walmart’s platform if not restrained by Amazon. In fact,
`Walmart routinely does field requests from third-party sellers to raise prices on its marketplace
`because they worry that a lower price on the Walmart platform will jeopardize their sales on the
`Amazon.com platform.39
`17. Many of the two million retailers who sell on the Amazon.com platform do so
`reluctantly. “Virtually every manufacturer and retailer of consumer goods in America faces [the]
`same predicament,” explains Stacy Mitchell, co-director of Institute for Local Self-Reliance said
`in recent testimony to the House of Representatives’ Judiciary Committee.40 “In order to reach
`more than half of the online market, they have to sell through a platform operated by one of their
`most aggressive and formidable competitors,” which she describes as “a bitter pill.”41 Amazon’s
`ownership of the largest retail marketplace platform gives it the necessary leverage to restrain its
`third-party sellers from competing anywhere else on price. Almost half of Amazon’s third-party
`sellers generate 81% to 100% of their revenues from sales on the Amazon.com platform.42 As its
`
`
`37 Supra Hart.
`38 Greg Swan, The Ultimate Walmart Marketplace Guide (Pros, Cons, Secrets and More)
`(Jan 9, 2020), https://tinuiti.com/blog/walmart/why-walmart-is-the-next-blue-ocean-opportunity-
`for-ecommerce-marketers/.
`39 Supra Amazon Squeezes Sellers That Offer Better Prices on Walmart.
`40 Testimony of Stacy F. Mitchell, Co-Director Institute for Local Self-Reliance, (Jul. 16,
`2019), https://docs.house.gov/meetings/JU/JU05/20190716/109793/HHRG-116-JU05-Wstate-
`MitchellS-20190716.pdf.
`41 Id.
`42 J. Clement, Percentage of e-commerce revenue from Amazon sales according to Amazon
`marketplace sellers in 2018, Statista (May 4, 2019), https://www.statista.com/statistics/259782/
`third-party-seller-share-of-amazon-platfo

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