Germany expands Amazon antitrust probe to include special abuse controls

Germany’s antitrust watchdog has decided to expand an existing investigation into Amazon’s marketplace business in light of special abuse powers it has confirmed apply to the e-commerce giant’s business in the country this summer.

The Federal Cartel Office (FCO) said yesterday that it is extending two ongoing “abuse enforcement proceedings” against Amazon to include the application of the “new tool for more effective oversight of large digital companies” (aka section 19a of GWB; a.k.a. a restarted competition law) — which is a reference to a 2021 reform of German competition law that targets digital giants found to have so-called “overriding importance for competition between markets” with a proactive antitrust regime that prohibits practices such as self-preference, denial of interoperability, and exclusive bundling of their own services to the detriment of competing offerings, among other ex ante prohibitions listed in Section 19b of the Act.

German legislation is similar to pan-European legislation Digital Markets Act (DMA), which was recently adopted by the block – and will takes effect next year — so the FCO is ahead of the curve here, and its implementation of special abuse controls may offer a small glimpse of the expanded controls coming down the pipe across the continent for Big Tech.

The FCO has two open investigations into Amazon, which are expanding to include an examination of whether they are complying with the restarted competition regime – one looking at price control mechanisms it says are used by Amazon to algorithmically control price-setting by third-party sellers in his market; and another proceeding focused on what it calls “branding,” also known as “potential disadvantages” for marketplace sellers as a result of various tools implemented by Amazon, such as (brand) manufacturer agreements regarding whether individual sellers can or cannot sell (branded) products on Amazon’s marketplace.

In a statement on the extension of the current procedure, Andreas Mund, president of the FCO, said:

“We are investigating in both proceedings whether and how Amazon interferes with the business opportunities of sellers who are active on Amazon’s marketplace and compete with Amazon’s own retail business. Amazon operates the most important market in e-commerce and thus has a key position in this area, which allows the company to set far-reaching competition rules on its platform. Our new powers, which are precisely designed to limit such rule-making power, allow us to intervene more effectively against Amazon’s anti-competitive practices.

Asked for a response to the development, an Amazon spokesperson sent us this statement – which confirms it is seeking to appeal the FCO’s earlier decision that its business falls under the special abuse control regime (NB: the decision remains enforceable pending appeal ):

“We disagree with the FCO’s interpretation of this complex new legislation and have lodged an appeal. The retail market in which Amazon operates is very large and extremely competitive, online and offline. We continue to cooperate with the Federal Cartel Office in these proceedings.”

When it comes to pricing, the e-commerce giant denies that it indulges in any abuses — saying generally that its business succeeds when sellers succeed, and claiming that third-party sellers set their own prices on its products. market.

As for the FCO’s investigation into brandgating, Amazon claims it never makes changes to selling privileges without good reason – further suggesting that any changes it makes to the way sellers can operate are intended to ensure a reliable shopping experience for customers, such as protecting buyers from illegitimate goods.

As Amazon continues to aggressively fight mounting allegations of antitrust abuse, competition scrutiny continues to pile up in Europe and beyond.

A European Union competition investigation into the e-commerce giant’s use of third-party seller data has been ongoing for years — and Amazon’s attempt to settle the investigation this summer, by offering a range of engagementswas quickly denounced by dozens of civil society and digital rights groups as weak sauce.

A few days later the Commission’s Executive Vice President and Head of Competition Margrethe Vestager warned the company his offer was not good enough.

The EU is still considering industry feedback on Amazon’s commitments, so it remains to be seen where this EU-wide antitrust case will land.

This the summer The UK’s Competition and Markets Authority has also announced its own investigation into Amazon’s marketplace – although it goes back a few years, so it still has work to do to determine whether Amazon has a dominant market position, and only if it confirms, that is the case, see if it is abusing that position and distorting competition by giving an unfair advantage to its own retail business or to sellers using its services over third-party sellers who are not. So the UK lags behind other European regulators in controlling Amazon.

Outside of Europe, Amazon is fighting antitrust charges – and court cases — and on home soil after years of increased control by US lawmakers on the market power of Big Tech.

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