The group argues that this deceptive practice is ongoing, and that their conduct should cause the FTC to block the merger between Amazon and Whole Foods. The complaint was brought on by the Consumer Watchdog group who have looked at 1,000 products on Amazon’s site and found that 46% of them had list or reference pricing associated with them. (NASDAQ:AMZN) buyout of Whole Foods, it’s also investigating a claim by a consumer group that Amazon misleads customers about pricing discounts.
The Federal Trade Commission (FTC) has confirmed that it has launched an investigation into allegations of tech giant Amazon’s misleading pricing discounts.
The online retailer’s bid for the organic grocery store chain is subject to approval by Whole Foods shareholders, as well as review by the Justice Department and FTC, which examine large mergers that might affect commerce in the United States.
Consumer Watchdog contends that in 61 percent of products with reference prices, Amazon’s reference price was higher than the price the product had sold for in the previous 90 days.
Additionally, a year ago Propublica, a nonprofit dedicated to investigative journalism, looked at 250 frequently purchased products over several weeks and found that around 75% of the time Amazon’s own products and those of companies that buy Amazon’s services were placed in its website’s coveted “buy box”.
A report commissioned by the Consumer Watchdog and released in March, said Amazon’s markdowns are not as generous as they appear. On average, the Amazon reference overstated the median market prices by $22, or about 20 percent. The spokesperson added that they validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.
Consumer Watchdog, which analyzed 1,000 items sold on Amazon, said the retailer often employs “previous” prices, which it alleges are created to give the appearance of big discounts.
Amazon says that Consumer Watchdog’s claims are “flat out wrong”.
Herbert Hovenkamp, an antitrust law professor, though, doesn’t think the FTC will forbid the acquisition even if Consumer Watchdog’s accusations prove true. The company is planning to buy the nationwide grocer for $13.7 billion.