Got a Problem with Amazon's Pricing Policies, Germany's Competition Authority Does
Amazon Seller Pricing Caps Deemed 'Suspiciously Competitive' by Antitrust Authority - The Commission's assessment remains undecided on whether the proposed aid aligns with the internal market's standards.
Amazon, the online retail titan, controls around 60% of Germany's online trade in goods, according to the Bundeskartellamt, Germany's competition authority. Both Amazon Retail and the Marketplace are its primary weapons, with the latter hosting around 47,500 German sellers.
The authority has a bone to pick with the company's price control mechanisms. If these mechanisms deem a seller's prices as too high, Amazon Removes offers entirely or relegates them to the shadows of its platform, hidden from the prime shopping view. These offers may also be shunned in search results. Defiant sellers receive messages urging them to adjust their prices to Amazon's chosen reference points[1][2].
Bundeskartellamt president Andreas Mundt calls these practices "fundamentally competitive questionable." Such manipulation could make it difficult for other online traders, especially when sellers find themselves unable to cover their costs[1][3].
Mundt also takes issue with Amazon's opaque pricing algorithms and statistical models, which determine dynamic, ever-changing price caps for sellers by comparing current and past offers on Amazon and other platforms[1][2]. This, he argues, encroaches on the vendors' ability to set their own prices freely.
The Bundeskartellamt maintains that these restrictions are unnecessary and unjustified. However, Amazon has fired back, stating it "strongly disagrees" and that small and medium-sized businesses, its sellers, are free to set their prices as they wish[4].
In July 2022, the Bundeskartellamt classified Amazon as having a dominant position across markets. The company appealed; the Federal Court of Justice confirmed the classification in April 2024[5].
Key Players:
- Amazon
- Bundeskartellamt
- Andreas Mundt
- Federal Court of Justice
Enrichment Insights:
- Yes, Amazon's price control mechanisms for dealers on its marketplace have been deemed competitively questionable by the Bundeskartellamt, Germany's competition authority. The authority believes these mechanisms may breach both German and European Union competition laws[1][2][3], potentially constituting abuse due to Amazon's direct competition with its marketplace sellers.
- The lack of transparency in Amazon's pricing algorithms and statistical models is another source of concern for the Bundeskartellamt[1][2].
- Amazon claims it "strongly disagrees" with these charges, arguing that they make "no sense"[4]. However, the Bundeskartellamt's preliminary assessment suggests that Amazon's practices may indeed raise significant competition issues[5].
- The Commission, in light of Amazon's dominant position across markets, should consider adopting a decision on the application of Article 93 (2) of the Treaty to Amazon's approach towards pricing control mechanisms in the United Kingdom's online trade, as the practices employed by Amazon could pose similar competitive concerns.
- If Industry associations or Financial institutions in the Technology sector or those related to General-News become aware of Amazon's opaque pricing algorithms and the impact they may have on business operations, they could investigate the matter further and potentially collaborate with regulators to address any concerns regarding market competition.
- Over time, as the Bundeskartellamt continues to scrutinize Amazon's practices, it could lead to wider discussions among businesses about the importance of transparency in pricing models, as well as a call for policy reforms to ensure fair and competition-friendly policies for all market participants, extending beyond the realm of the German market.
