Bundeskartellamt has concerns about Amazon’s use of so-called price control mechanisms

The Bundeskartellamt has today sent Amazon.com Inc., Seattle, USA, and Amazon EU S.à.r.l., Luxembourg, (together “Amazon”), its preliminary legal assessment of the company’s influence on the prices charged by sellers on the Amazon Marketplace and of the Amazon Marketplace Fair Pricing Policy. Sellers offering their products on the Amazon trading platform should not exceed certain price caps set by Amazon. In the Bundeskartellamt’s preliminary view, this conduct is likely to be prohibited under the special abuse control provisions for large digital companies (Section 19a(2) of the German Competition Act (GWB)) as well as under the general abuse control provisions of Section 19 GWB and Article 102 TFEU. Amazon now has the opportunity to comment on the allegations.

Amazon operates a comprehensive digital e-commerce ecosystem, including, most notably, the amazon.de trading platform, which accounts for around 60 per cent of online retail sales in Germany. Amazon uses this platform in two ways: to operate its own retail business, “Amazon Retail”, and to run an online marketplace, “amazon.de Marketplace”, where third-party sellers can sell their goods directly to end customers.

Andreas Mundt, President of the Bundeskartellamt: “Competition in Germany’s online retail trade is largely determined by the rules Amazon sets for its trading platform. As Amazon directly competes with the Marketplace sellers on its platform, influencing its competitors’ pricing, including in the form of price caps, is inherently problematic from a competition perspective. This is particularly the case when the sellers in question are no longer able to cover their own costs and the trading platform is being used to hinder the rest of the online retail trade in a way that is contrary to competition law.”

Amazon uses price control mechanisms to review the sellers’ prices. If the mechanisms determine that the prices are too high, the offers in question are either altogether removed from the Marketplace or not displayed in the Buy Box. Their display may also be restricted in other ways, for example, in the search results list.

Andreas Mundt: “Our preliminary assessment was also influenced by the fact that the parameters of the price control mechanisms used by Amazon are set at its own discretion and the price caps for Marketplace sellers are not transparent.”

In accordance with its Marketplace Fair Pricing Policy, Amazon regularly reviews the sellers’ prices on Amazon Marketplace. For this purpose, Amazon uses various algorithms and statistical models, drawing on different prices and price components of current or previous offers on Amazon, as well as those of external competitors, in order to calculate dynamic, changing price caps for the sellers’ offers. In this context, Amazon distinguishes between three different categories. Offers categorised as “pricing errors” are removed from the Marketplace. Offers classified as “significantly high prices” or “uncompetitive prices” are excluded from appearing in the Buy Box; their display in the search results list is also restricted, and they may be excluded from advertising on Amazon. It is possible that the Buy Box is not displayed at all for a certain product because none of the sellers comply with Amazon’s price caps. When such restrictions are imposed, the sellers affected are requested to adjust their prices to the reference prices deemed appropriate by Amazon.

These mechanisms restrict the visibility of the sellers’ offers and, based on non-transparent platform rules, interfere with their freedom to set their own prices. The Bundeskartellamt’s current assessment suggests that these restrictions are unreasonable and not objectively justified. In the Bundeskartellamt’s preliminary view, this behaviour constitutes abusive conduct under Section 19a(2) GWB, which sets out special provisions for large digital companies, and also violates the general abuse control provisions under Section 19 GWB and Article 102 TFEU. Amazon now has the opportunity to comment on the allegations.

In its current assessment, the Bundeskartellamt has identified the following aspects in particular as raising competition concerns:

• Amazon’s interference with the visibility of the sellers’ offers by frequently changing the price caps set at its discretion may restrict the competitive process on the Marketplace. The current assessment shows that these restrictions are not based on any objective, verifiable principles, nor are they made sufficiently transparent in Amazon’s Marketplace Policy or communication with third-party sellers.
• Amazon’s price control mechanisms are also likely to interfere with the freedom of Marketplace sellers to set their own prices. Based on the Bundeskartellamt’s current assessment, this may result in a higher level of concentration on the Marketplace as strict price caps often mean that sellers are unable to cover their costs, putting them at risk of having to leave the Marketplace.
• According to the Bundeskartellamt’s current assessment, the price control mechanisms used by Amazon, which competes with the Marketplace sellers, could serve to coordinate Marketplace prices based on Amazon’s own pricing principles and ideas, which are difficult for other online sellers to match, and may result in a uniform pricing strategy on the trading platform at the expense of other online sellers. In particular, Amazon’s practice of systematically matching the lowest price found in other online shops across its entire trading platform could pose a significant barrier to switching and deter other online retailers from engaging in price competition and offering lower prices.

In July 2022 the Bundeskartellamt found that Amazon was of paramount significance for competition across markets and therefore subject to extended abuse control under Section 19a GWB (see press release of 6 July 2022). This decision was confirmed by the Federal Court of Justice in April 2024.

Following this finding, the Bundeskartellamt also initiated the present proceeding under Section 19a(2) GWB (see press release of 14 November 2022). The Bundeskartellamt’s preliminary assessment is based on in-depth investigations, including a large-scale survey of online sellers (see news update of 2 September 2024, in German only).

In these proceedings, the Bundeskartellamt has worked closely with the European Commission, which is responsible, among other things, for enforcing the EU Regulation on contestable and fair markets in the digital sector (Digital Markets Act). It has also coordinated its approach with the Bundesnetzagentur, which is responsible for enforcing the Platform-to-Business Regulation.