Apple, Amazon Face Class Action Lawsuit for Allegedly Colluding to Drive Up iPhone, iPad Prices in the US

Apple and Amazon were accused in an antitrust lawsuit on Wednesday of conspiring to drive up iPhone and iPad prices by removing nearly all other resellers of new Apple products from Amazon's website.

The proposed class action in Seattle federal court objected to an agreement that 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.

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

Prices rose more than 10 percent, while Apple stabilized the prices it charged in retail stores, the complaint said. Discounts of 20 percent or more that were once common no longer are, it added.

"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. The combined product revenue of Cupertino, California-based Apple and Seattle-based Amazon topped $125 billion (roughly Rs. 10.2 lakh crore) in this year's third quarter.

Wednesday's lawsuit covers US residents who bought new iPhones and iPads on Amazon since January 2019.

It seeks unspecified triple damages, restitution, and an end to the companies' alleged so-called "group boycott."

The named complainant, Steven Floyd of Williamsport, Pennsylvania, said he paid $319.99 (roughly Rs. 26,000) for a new iPad he bought from Amazon on the company's website, and was denied a chance to pay less because the competition had been stifled.

Last month, an Italian administrative court scrapped a EUR 173.3 million (roughly Rs. 1,420 crore) fine against Apple and Amazon by Italy's antitrust regulator for alleged price collusion.

The case is Floyd v Amazon.com Inc et al, U.S. District Court, Western District of Washington, No. 22-01599.

© Thomson Reuters 2022