Apple and Amazon collude to raise iPhone and iPad prices, class-action lawsuit claims

In early 2018, there were more than 600 companies on Amazon’s marketplace that you could buy Apple products from, including independent repairers, usually at lower prices than Apple itself. By July 2019, there were only seven, and the class-action lawsuit says this is the result of an illegal agreement between the tech giants.

The lawsuit (PDF) was filed Wednesday in Seattle federal court by law firm Hagens Berman on behalf of Stephen Floyd. Floyd is a Pennsylvania resident who bought an iPad on Amazon for $320 in early 2021 and was denied “a lower price that would be in a normal competitive market,”the lawsuit says.

The name Hagens Berman should be familiar to Apple legal advisers and those who closely follow the company’s legal history. The firm sued Apple over scratched iPod nano cases in 2005 and e-book price fixing in 2011, and mediated disputes for small iOS developers on the App Store in 2021. Hagens Berman was also involved in a complex lawsuit involving iOS touchscreen patents, in which Apple accused the firm of secretly relying on “additional counsel.”

The lawsuit is largely about the November 2018 agreement between Apple and Amazon, one of which is widely publicized, which allowed Amazon to directly sell Apple products through its marketplace, and also required any other firm to get Apple’s permission to sell their products on the site after January. 2019. This has created a large market for refurbished Apple products, which tend to hold their value much better in used and refurbished condition than most other electronics.

In addition, the lawsuit alleges that it was “an illegal horizontal agreement between Apple and Amazon to eliminate or at least significantly reduce the competitive threat posed by third-party sellers.”This agreement is “blatant restraint “and is illegal under the Sherman Act, the lawsuit says.

The advantage of this collusion, according to the lawsuit, was that Amazon received “permanent supplies at up to 10% off”if it kept unauthorized resellers out of its store, and instantly became the top supplier of Apple products on its site. In the meantime, Apple eliminated “intense price competition”that drove down its own retail prices, the lawsuit alleges. Prior to the agreement, discounts on third-party iPhones and iPads on Amazon could be 20 percent or more, lawyer Hagens Berman said in a blog post.

Under the same agreement, the Italian antitrust authority has previously imposed fines for restricting firms that can sell Beats headphones in the Italian Amazon store.

At the time of this writing, neither Apple nor Amazon has considered the claims of the lawsuit. Hagens Berman is looking for people who bought an iPhone or iPad from Amazon via the standard “Buy Box”to sign up for their class. The damages were not listed in the lawsuit, although it does require a jury trial and numerous forms of injunctive relief under antitrust law.

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