Amazon to Demur to Calif. AG’s Antitrust Complaint on March 7

Amazon will bring its Dec. 6 demurrer to California’s antitrust complaint against the company to San Francisco County Superior Court March 7, said Amazon in a notice Thursday (docket CGC-22-601826). A demurrer under California law argues that a complaint should be dismissed because it fails to assert facts sufficient to support a cause of action.

California Attorney General Rob Bonta (D) filed the heavily redacted complaint Sept. 15 (see 2210130034), alleging Amazon "makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market." That's because Amazon "has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price," said Bonta.

Amazon “invested heavily to earn the trust of its customers by offering low, competitive prices,” said the Dec. 6 demurrer. It doesn't feature retail offers “when it knows that customers could find a better offer on a competitor’s site,” it said. “This practice is procompetitive because it encourages price and other merits competition, fulfills customers’ expectations that they will find competitive prices and good service in Amazon’s store, and improves choices for customers.”

The California AG nonetheless alleges “the improbable theory that this basic practice, which Amazon adopts on its own without seeking or receiving the agreement of any other party, violates California law,” it said. The AG seeks a court order requiring Amazon to feature offers “that it knows are bad deals for its customers,” it said. “If the law required this strange result, consumers would be harmed, and their trust in Amazon as a retailer would be damaged.”

The complaint “fails to state facts sufficient to constitute a cause of action on any of the asserted claims for relief,” said the demurrer. “It fails to plead concerted activity, as required under California law, or in the few instances where it does mention an agreement, it fails to plead facts showing a substantially adverse effect on competition.” California’s antitrust law, the Cartwright Act, “prohibits only concerted action in restraint of trade, not the unilateral pricing and promotional policies” that are the focus of the complaint.

The California AG alleges some third-party sellers “may try to game Amazon’s policies to their own benefit” by raising their prices or limiting their product availability, said the demurrer. There's no allegation that Amazon and third-party sellers collude on pricing decisions or product availability, it said.

To the contrary, the complaint “accuses Amazon of being deliberately opaque about its internal policies that determine when it will promote an offer,” said the demurrer. The complaint “does not state any violation of California’s antitrust law regarding these unilateral policies and practices,” it said. The complaint’s unfair competition claims “fail for the same reasons,” it said.