Apple and Amazon conspired to raise iPhone and iPad prices, claims class action lawsuit
Alleges agreement choked resellers using Amazon Marketplace, eliminated 98% of competition
Apple and Amazon stand accused of colluding to push up the price of iPhones and iPads by trying to suppress the competitive threat from resellers using Amazon's Marketplace.
The class action lawsuit (PDF) filed in the US District Court for the Western District of Washington, is being led by plaintiff Steven Floyd, who says he was denied the opportunity to buy an iPad more cheaply because of the situation.
The legal team behind the complaint is law firm Hagens Berman, which has battered Apple in multiple past cases over price fixing.
In the filing, Floyd alleges an “unlawful horizontal agreement between Apple and Amazon to eliminate or at least severely reduce the competitive threat posed by third party merchants.”
The complaint claims this agreement was enacted from the start of 2019, “the existence of which neither defendant denies” the says the law firm. This allowed Apple to restrict the number of resellers on Amazon’s platform, and in turn Apple gave discounted wholesale prices, or so the filing claims.
If correct, this stifling of competition would violate antitrust laws and mean consumers likely paid more for their iGadgets.
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The lawsuit claims the illicit agreement between the duo had a desired effect of dramatically reducing the numbers of third party sellers on Amazon Marketplace by 98 percent, from 600 to just seven. In turn Amazon evolved from being a “marginal seller” of Apple gear to dominate.
“From the outset of these discussions, the parties discussed ‘gating third party resellers’,” the lawsuit states. “Ultimately Apple proposed, and Amazon agreed, to limit the number of resellers in each country to no more than 20. This arbitrary and purely quantitative threshold excluded even Authorized Resellers of Apple products.”
The lawsuit claims that data indicates there were at least 100 independent reseller entities peddling iPhones and at least 500 selling iPads on the Marketplace before the agreement was established.
In July, the UK’s Competition and Markets Authority launched an investigation into Amazon’s Marketplace related to its Buy Box promo and Prime label feature. The EU is already probing the e-commerce biz. Authorities in the US have also taken a closer look at online platforms using tactics to hamper third party sellers using them.
Resellers previously said they could not compete with Amazon by selling hardware on price but could if they delivered services of value to clients.
"To team up with Amazon [Business] is like to team up with the devil. We team up with Amazon but not in a transactional area,” said Rudolf Hotter, COO at German-based giant Cancom.
Steve Berman, managing partner at Hagens Berman, said: “When our antitrust trial team reviewed the numbers behind this lawsuit, we very quickly noticed several red flags. Suddenly losing 98 percent of sellers of a particular product is genuinely unheard of, especially when the product at hand is made by the world’s largest tech company and sold by the world’s largest retailer.”
Berman said: “When Apple and Amazon renewed their existing reseller agreement in 2019, the only losing party to their plan was consumers, who were blindsided by the price increases.”
“Where consumers used to be able to find discounted prices of upwards of 20 percent for iPhones and iPads for sale on Amazon Marketplace, now they get locked into Apple’s premium pricing,” he claimed.
Hagens Berman is looking for consumers that bought an iPhone or iPad of any model from 2019 to sign up for the putative class action.
We have asked Amazon and Apple to comment. ®