Apple, Amazon Lawsuit Alleges Price Collusion

Lawsuit filed against Apple and Amazon alleges both conspired to raise iPhone and iPad prices, by suppressing reseller competition

Apple and Amazon have been hit with a lawsuit in the United States that alleges both firms colluded together to push up the price of iPhones and iPads.

The lawsuit filed in the US District Court for the Western District of Washington (Seattle) is being led by plaintiff Steven Floyd of Williamsport, Pennsylvania, who allges he was denied the opportunity to buy an iPad more cheaply because of the situation.

This is not the first time that both Apple and Amazon have faced such allegations. In 2020 an investigation in Italy saw the Italian offices of both Apple and Amazon raided by local authorities.

Price fixing lawsuit

The Italian investigation centred over whether both firms colluded, so only selected resellers were allowed to sell Apple products, such as iPhones, iPad, and Apple Watch, and Beats headphones on Amazon’s Italian marketplace.

At the time Italian officials concluded that both parties had engaged in these practices, and in November 2021 Apple was fined 134.5m euros ($151m), while Amazon was fined 68.7m euros ($77m).

However a year later and an Italian administrative court in October 2022 scrapped the fine against Apple and Amazon by Italy’s antitrust regulator for alleged price collusion.

Now both Apple and Amazon are facing a similar accusation in the United States.

The US lawsuit alleges Apple and Amazon colluded to push up the price of iPhones and iPads by trying to suppress the competitive threat from resellers using Amazon’s Marketplace, Reuters reported.

The legal team behind the complaint is the international law firm Hagens Berman, which has previously successfully sued Apple in multiple cases over price fixing.

2019 agreement

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.”

According to Reuters, this agreement took effect in January 2019, under which Apple gave Amazon discounts of up to 10 percent on its products, in exchange for Amazon letting just seven of 600 resellers stay on its platform – a loss of 98 percent.

This allegedly transformed Amazon into the dominant reseller of new iPhones and iPads on its website, according to the complaint, after it had previously only carried a limited number of Apple products (as well as knockoffs).

Prices rose more than 10 percent, while Apple stabilised the prices it charged in retail stores, the complaint alleges.

Discounts of 20 percent or more that were once common no longer are, the complaint alleges.

“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.”

Apple and Amazon did not immediately respond to requests for comment, Reuters reported.

The US lawsuit filed Wednesday’s covers American residents who bought new iPhones and iPads on Amazon since January 2019.

The complaint seeks unspecified triple damages, restitution, and an end to the companies’ alleged “group boycott.”

The lead plaintiff, Steven Floyd claimed he had paid $319.99 for a new iPad he bought from Amazon on the company’s website, and was denied a chance to pay less because competition had been stifled.