In an antitrust lawsuit filed on Wednesday, Apple Inc. and Amazon.com Inc. were charged with planning to raise the price of the iPhone and iPad by removing practically all other dealers of brand-new Apple devices from Amazon's website.
As stated in the class-action antitrust lawsuit, Amazon is the largest online electronics retailer, accounting for nearly 82% of the market and selling Apple products directly in addition to letting third parties sell new or used items.
According to the complaint, Apple and Amazon have been suppressing Apple resellers with a "horizontal agreement that eliminated nearly all Apple resellers on Amazon Marketplace," since they do not profit from purchases made by third-party customers.
In January 2019, an arrangement went into effect in which Apple provided Amazon discounts of up to 10% on its items in exchange for Amazon allowing only seven out of 600 dealers to continue using its platform. This agreement was the subject of the proposed class action in Seattle federal court.
After only carrying a small selection of Apple devices in addition to imitations, this made Amazon the dominant reseller of new iPhones and iPads on its website. While Apple stabilized the pricing it charged in retail locations, prices increased by more than 10%, according to the complaint. Discounts of 20% or more that were once typical are no longer, it continued.
The case claims that as a result of this deal, Amazon customers began having to pay extra for Apple devices on the website.
"With virtually all other Apple resellers eliminated from the platform, price competition deteriorated almost immediately," the lawsuit read. "The steep discounts on Apple products that consumers once enjoyed on Amazon Marketplace eroded, with prices rising steadily."
"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," the complaint said. "The case is open and shut."
In the third quarter of this year, the combined product revenue of Cupertino, California-based Apple, and Seattle-based Amazon exceeded $125 billion.
The lawsuit filed on Wednesday includes U.S. citizens who purchased brand-new iPhones and iPads on Amazon starting in January 2019. The named plaintiff, Steven Floyd of Williamsport, Pennsylvania, claimed he paid $319.99 for a new iPad he purchased from Amazon on the company's website and was denied a chance to pay less because the competition had been stifled.
The lawsuit asks for unspecified triple damages, restitution, and an end to the companies' alleged so-called "group boycott."
