Antitrust: German cartel office investigates Amazon’s treatment of small sellers

By Handelsblatt staff

In its busiest time of year, Amazon is getting an unwelcome order from the German cartel office.

Amid growing complaints from Marketplace vendors on Amazon, Germany’s Federal Cartel Office is launching an investigation into the US e-commerce giant for abuse of its market position.

The antitrust agency is investigating liability rules that disadvantage sellers, rules on product reviews, opaque terminations and account suspensions, withheld or delayed payments, and other rules on what sellers can offer.

Many Marketplace vendors are dependent on Amazon, and vice versa: Independent traders account for a quarter of all total sales on Amazon.de, or €2.1 billion in sales last year. But Amazon is also their direct competitor. “This harbors the possibility of hindering other sellers on the platform,” said Andreas Mundt, head of the cartel office.

Amazon declined to comment on an ongoing investigation, but a spokesman said Amazon will fully cooperate and will continue to support small and medium-sized firms.

The cartel office may impose a fine at the end of its investigation. Other consequences could include restrictions or even a halt to certain practices, said competition expert Justus Haucap, former head of the Monopoly Commission. Marketplace dealers could use the findings to sue Amazon for damages.

One seller said Amazon suspended his account without notice for violating its policy of selling used items as new. But he used Amazon for fulfillment, letting the e-commerce giant fulfill orders of his product from its warehouse and processing any returns. Amazon had sent a returned product out without his knowledge, the seller said, which triggered the buyer’s complaint. The seller then had to go through Amazon’s onerous procedure for reinstating his account, which took two weeks, during which time he made no sales.

Another practice in question is how Amazon determines which seller is selected when a customer clicks “Buy it now” in the so-called “buy box.” Many products are sold by multiple sellers as well as Amazon, and some sellers accuse Amazon of selling products at a loss to keep sales for itself.

But sellers have little choice than to stay on Amazon’s good side, lest they lose their business altogether. One seller whose account was suspended had to lay off 15 employees because sales dried up.

Amazon’s rivals must surely be tickled by the cartel office investigation. Otto Group, which transformed from a classic mail-order house to Germany’s No. 2 online retailer, is bulking up its roster of third-party sellers, which already includes Adidas.

“The investigation by the cartel office shows in our view that it is important for sellers on online marketplaces to be present not on only one but on several platforms,” said Henning Gieseke, head of Real.de, which has 5,000 sellers on its platform offering 15 million products.

Justice Minister Katarina Barley welcomed the Amazon antitrust investigation. “The large Internet platforms not only shape our everyday lives, but have also gained considerable market power,” she told Handelsblatt. “They must not use this dominant position to mistreat small traders.”

Dana Heide covers the digital economy for Handelsblatt. Christoph Kapalschinski covers retail. Florian Kolf is team leader for retail and consumer goods. Dietmar Neuerer covers consumer protection issues. Darrell Delamaide adapted this article into English for Handelsblatt Today. To contact the authors: globaledition@vhb.de