Background
Amazon's cross-market significance for competition
Current proceedings against Amazon

Comment


Since 2021, the German Federal Cartel Office (FCO) has had a new instrument at its disposal against the behaviour of large digital corporations. The newly created section 19a of the Competition Act (GWB) aims to enable the FCO to intervene earlier and more effectively. The FCO is currently examining the use of this instrument in two proceedings against Amazon – one concerning Amazon's price control mechanisms and the other concerning "brand gating".

Background

Section 19a was added to the GWB in the course of the 10th amendment to the GWB in 2021. As soon as the FCO has determined that a company has an overriding cross-market significance for competition, it can prohibit the company from certain conduct that could endanger competition – namely, from:

  • treating competitors' offers and their own offers unequally (so-called "self-preferencing");
  • hindering competitors in a market in which they can rapidly expand their position;
  • hindering another company by using the competitively relevant data they collect;
  • making the portability of user data more difficult and thus hindering competition; and
  • performing certain actions that can cause markets to "tip" into a monopoly.

Amazon's cross-market significance for competition

On 5 July 2022, the FCO determined that Amazon had outstanding cross-market importance for competition and that the new supervisory instrument could therefore be applied to it. This finding was based on an overall assessment of the circumstances. In particular, according to the FCO's 5 July 2022 284-page decision and its 6 July 2022 case report, Amazon:

  • had a dominant position on the German market for the provision of online marketplace services for commercial traders;
  • was active in a large number of different markets, which were interconnected through vertical integration or in some other way;
  • was of considerable importance for the access of third parties to procurement and sales markets through its activities – in particular, as an operator of a hybrid trading platform and through its business activities in the logistics sector and in the field of the internet of things; and
  • had excellent access to competitively relevant data and considerable financial power.

Current proceedings against Amazon

The FCO is examining the application of the new set of instruments in two ongoing abuse proceedings against Amazon.

Price control mechanisms
The FCO is investigating the algorithmic review of the pricing of third-party traders on the Amazon marketplace. According to the FCO, there is a risk here that merchants' offers are less easy to find or are even blocked.

"Brand gating"
The FCO is investigating the possible disadvantages of marketplace merchants through various instruments of Amazon – for example, agreements with (brand) manufacturers concerning the admission or exclusion of merchants to sell (branded) products on the Amazon marketplace.

Comment

At present, it is not known when the FCO will make a decision in these proceedings. In principle, however, the new instruments should enable faster decisions to be made than before.

For further information on this topic please contact Sascha Dethof at Fieldfisher by telephone (+49 211 950 749 0) or email ([email protected]). The Fieldfisher website can be accessed at www.fieldfisher.com.