The Federal Cartel Office has investigated how Amazon controls the prices that third-party retailers charge on its platform. From the competition authority’s point of view, the online retailer is going too far. That’s why the cartel office wants to oblige Amazon to limit its price specifications. In addition, the company is expected to pay around 59 million euros that it gained in “economic advantage” through “antitrust behavior.” Amazon rejected the allegations and announced that it would take legal action.
Anyone who orders something from Amazon in Germany today often does not receive their goods directly from the online retailer’s range, but rather from one of the more than 200,000 retailers on the American Internet giant’s marketplace. Around 60 percent of the trading volume, which amounts to more than 50 billion euros per year, comes via third-party traders. The marketplace is very important to both the American company and the merchants who sell there.
Billions are transacted through the marketplace
Amazon checks the prices of its marketplace merchants according to various criteria: If the control mechanism assesses a price as too high, the merchants’ offers are either removed from the marketplace or no longer displayed in highlighted fields. It is important for retailers to be displayed in a highlighted shopping field, the so-called “Buy Box”, instead of in the collection field called “Other sellers on Amazon”. This means that customers have to click through numerous other offers before a purchase can be made. Many users see this as inconvenient and therefore rarely do it. Ergo: Those who are less visible implement less.
“Amazon enters into direct competition with the other marketplace retailers on its platform. Therefore, influencing competitors’ pricing, even in the form of price caps, is only permitted in absolutely exceptional cases, such as price usury,” said Andreas Mundt, President of the Federal Cartel Office. Otherwise there would be a risk that the price level on the trading platform would be controlled according to Amazon’s ideas. “For the retailers affected, the interventions in pricing can mean that they can no longer cover their own costs, with the consequence that they are forced out of the marketplace.”
Other fees instead of loss of visibility?
Amazon always emphasizes that it wants to offer its customers the lowest possible prices. According to its own statements, the Cartel Office does not want to restrict this at all with its requirements; However, no price control mechanisms are needed for this goal. “For example, appropriate incentives could be given to retailers by reducing the fees and commissions that retailers have to pay to Amazon,” said Mundt. However, this should not be regulated via visibility on the platform, especially because the control mechanisms follow non-transparent rules and notifications. It is not clear to marketplace traders how the price limits are determined.
The cartel office has therefore prohibited Amazon from using its three price control mechanisms. Even if there is suspicion of price extortion, the online retailer must make it transparent why certain offers are no longer visible or have disappeared from the marketplace. The mechanism must be explained in the general terms and conditions, how often price caps are adjusted and what sanction consequences there are.
The Federal Cartel Office has coordinated with the Federal Network Agency, which is the responsible German authority for European platform control supervision – according to the “Digital Services Act”, Amazon falls under the label “very large platform”. The online retailer can file a complaint within one month, which will be decided by the Federal Court of Justice. Amazon announced that the cartel office’s decision was based on a German regulation and contradicted the consumer-related standards of EU competition law: “As a result of this decision, Amazon would be the only retailer in Germany forced to highlight uncompetitive prices for customers. This makes no sense for customers, sales partners and the competition,” said Amazon Germany boss Rocco Bräuniger.
