Down Arrow Button Icon

Amazon’s determination to offer shoppers the best deals is prompting merchants selling products on its marketplace to raise their prices on competing websites, a testament to the company’s growing influence over the e-commerce market.

Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace—effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon.

Pricing alerts reviewed by Bloomberg show Amazon doesn’t explicitly tell sellers to raise prices on other sites, and the goal may be to push them to lower their prices on Amazon. But in interviews, merchants say they’re so hemmed in by rising costs levied by Amazon and reliant on sales on its marketplace, that they’re more likely to raise their prices elsewhere.

“Monopolization charges are always about business conduct that causes harm in a market,” said Jennifer Rie, an analyst at Bloomberg Intelligence who specializes in antitrust litigation. “It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price.”

Antitrust experts say the Amazon policy is likely to attract scrutiny from Congress and the Federal Trade Commission, which recently took over jurisdiction of the Seattle-based company. So far, criticism of Amazon’s market power has centered on whether it mines merchants’ sales data to launch competing products and then uses its dominance to make the original product harder to find on its marketplace. Harming consumers by prompting merchants to raise prices on other sites more neatly fits the traditional definition of antitrust behavior in the U.S.

In an emailed statement, an Amazon spokesperson said: “Sellers have full control of their own prices both on and off Amazon, and we help them maximize their sales in our store by providing them insights on how to be the featured offer.” Walmart declined to comment.

Online merchants typically sell their products on multiple websites, including Amazon, eBay, and Walmart, which also removes products with “highly uncompetitive” prices compared with those on other sites. But merchants often generate most of their revenue on Amazon, which now accounts for almost 40% of online sales in the U.S., according to EMarketer.

Merchants have long complained that Amazon wields outsize influence over their businesses. Besides paying higher fees, many now have to buy advertising to stand out on the increasingly cluttered site. Some report giving Amazon 40% or more of each transaction, up from 20% a few years ago.

Some merchants are keen to increase their sales on Walmart, which charges less to sell products on its marketplace. But sellers say the price alerts are forcing them to maintain allegiance to Amazon and making it harder to diversify their businesses. Walmart routinely fields requests from merchants to raise prices on its marketplace because they worry a lower price on Walmart will jeopardize their sales on Amazon, says a Walmart manager, who requested anonymity to speak freely about an internal matter.

Amazon began sending the price alerts in 2017, and merchants say they have increased in frequency amid an intensifying price war between Amazon and Walmart. Merchants receive the alerts via a web platform they use to manage their Amazon businesses. The alerts show the product, the price on Amazon and the price found elsewhere on the web. They don’t name the competing site with a lower price; the merchants must find that themselves.

A typical pricing alert reads: “One or more of your offers is currently ineligible for being a featured offer on the product detail page because those items are priced higher on Amazon than at other retailers.”

In plain English, that means merchants lose the prominent “buy now” button that simplifies shopping on Amazon. With that icon missing, shoppers can still buy the products, but it’s a more tedious and unfamiliar process, which can hurt sales. The lost purchases cascade through algorithms determining which products shoppers see, resulting in the items getting buried on the site, according to several merchants.

Anders Palmquist, a former Amazon employee and now vice president of the e-commerce consulting firm ARMR, said one of his clients was told that a lawn and garden product sold on Amazon was found at a lower price on another site. Palmquist investigated and discovered the item was selling for less on Walmart, prompting his client to halt the discount. Palmquist said his client is the only one selling the product online, so it wasn’t a matter of a competing manufacturer offering the same product for less.

The company’s behavior contradicts testimony Amazon associate general counsel Nate Sutton gave last month during a congressional hearing examining the growing power of big tech companies. Sutton said Amazon faces stiff competition from rivals like Walmart and eBay, giving it an incentive to help online merchants succeed on Amazon so they don’t defect to other sites.

“We know sellers have other ways to reach customers, so we invest in them, support them and make continuous efforts to improve their experience,” Sutton said. “Our incentive is to help the sellers succeed because we rely on them.”

While that’s true, the pricing alerts have a chilling effect on merchants since many can’t afford to jeopardize their sales on Amazon by offering better deals on other sites. It’s an example of a practice that’s potentially harmful to sellers but beneficial to Amazon.

Jason Boyce, an Amazon merchant turned consultant, said he instructs clients to offer the same prices on all sites to avoid losing prominence on Amazon even if they can afford to sell for less on other sites.

“Amazon is in control of the price, not the merchant,” said Boyce, who runs Avenue 7 Media.

Molson Hart, who sells toys online through his company Viahart, typifies the challenge. Hart says more than 98% of his $4 million in 2018 sales came from Amazon even though he also sells his products on eBay, Walmart, and his own website. He was trying to sell a toy stuffed tiger for $150 on Amazon. Hart designs, manufactures, imports, stores, and ships the item to customers; Amazon would get $40 for listing some photographs on its website, handling the payment, and charging Hart to advertise the product on the site.

Hart said he could sell the product for about $40 less on his own website, but won’t since that would jeopardize his sales on Amazon due to its pricing enforcement, he said. “If we sell our products for less on channels outside Amazon and Amazon detects this, our products will not appear as prominently in search,” he wrote in a recent article on Medium. Hart has since lowered the price of the tigers on Amazon and is now selling them at a loss.

Amazon used to require that merchants offer their best prices on Amazon as terms for selling on the site, but the agreement attracted the attention of regulators bent on ensuring competition. Amazon removed the requirement for sellers in Europe in 2013 following investigations and quietly removed the requirement without explanation for U.S. sellers in March shortly after Democratic presidential hopeful Senator Elizabeth Warren announced a goal of breaking up Amazon and other big tech companies.

The price alerts help Amazon get around regulators’ complaints, according to Diana Moss, president of the American Antitrust Institute, a nonprofit that advocates for aggressive antitrust enforcement. “They’ve taken this policy that was overtly concerning to antitrust regulators and turned it into something that’s a little bit harder to get at,” she said.

Even so, Michael Kades, a former FTC attorney who now researches antitrust issues at the Washington Center for Equitable Growth, says the price alerts will almost certainly draw the government’s attention. “If regulators can prove that this conduct is causing merchants to raise prices on other platforms,” he said, “Amazon loses the argument that their policies are all about giving everyone lower prices.”

Amazon Penalizes Marketplace Sellers That Offer Better Prices on Walmart.com

More must-read stories from Fortune: