Amazon.com Inc. removed a clause in its agreements with third-party sellers in the U.S. that prohibits them from offering their products at lower prices on competing platforms, the Financial Times (London) reported March 11, citing a person with knowledge of the decision.
The price parity agreement, better known as the most favored nation clause, is a contract provision that requires merchants to give a company that would sell its products the best terms available compared with other marketplace operators.
The online retailer in 2013 dropped a similar policy in Europe after the U.K. and Germany launched probes into the clause, the report said.
A source confirmed the policy change to the newspaper. Amazon reportedly declined to comment.
In a statement following Amazon's decision, Sen. Richard Blumenthal, D-Conn., said the e-commerce company's move to scrap "its abusive contract clause" only came after "aggressive advocacy and attention," according to the report.
Blumenthal, in a letter dated Dec. 19, 2018, urged Federal Trade Commission Chairman Joseph Simons to launch an investigation into Amazon's contract provision as it "could stifle market competition and artificially inflate prices on consumer goods."
The development comes on the heels of a plan by Sen. Elizabeth Warren, D-Mass., to undo "illegal and anti-competitive tech mergers" that may result in the break up of industry giants, such as Amazon, Facebook Inc. and Google LLC.
Warren said her administration will pass the legislation if she is elected as president in 2020.