Report from Bloomberg
In Brief – Germany’s competition authority has ordered Amazon to stop enforcing retailer price controls on its German marketplace and has penalized the company €59 million, which it argues is excess profits it earned from its anticompetitive pricing policies. The Federal Cartel Office (FCO) determined that Amazon’s price policies violate Germany’s digital economy competition rules because the company demotes products it considers overpriced, despite competing directly with retailers on its own platform. The regulator argues that Amazon could encourage sellers to lower prices on its platform by offering incentives such as discounted fees, and that enforcing price rules is only permitted in exceptional cases like price gouging and then must follow regulatory guidelines. Amazon said it will appeal the “unprecedented” ruling.
Context – The FCO action targets Amazon pricing policies that are described as “price parity” or “price fixing.” Amazon has a long price parity track record. They argue that they simply push third-party sellers to lower their prices on Amazon, which benefits shoppers on the platform. Critics respond that Amazon penalize third-party sellers who want to sell their goods for lower prices on other platforms that charge lower seller fees and therefore would allow a seller to make similar profits at lower prices. This is especially problematic because Amazon charges fees that often reach 50% and is the dominant online marketplace in Germany, so a seller that wants to offer lower prices on a different platform with lower fees will lose sales on Amazon. often their top market. Critics argue that sellers raise prices elsewhere to meet the level needed to be profitable on Amazon given its fees. Amazon faces legal threats in numerous markets on this issue, including consumer class action lawsuits in US federal court and in the UK, as part of the US FTC’s major antitrust case, an antitrust lawsuit by California’s Attorney General, and a federal antitrust lawsuit by defunct low-fee online marketplace Zulily. The European Commission, which has forced Booking to drop its hotel price parity policies, is reportedly considering bringing a case against Amazon under the DMA.