German Antitrust Watchdog Probing Amazon For Price-Setting After Canada Launches Similar Investigation

Germany's antitrust watchdog has launched an investigation of Amazon (AMZN) to determine if the online retailing giant has abused its growing market domination by fixing prices there.

In an interview with the Frankfurter Allgemeine Zeitung newspaper, Andreas Mundt, the president of the Federal Cartel Office, said his agency will examine Amazon's relationship with third-party traders that sell products on its website.

"We are currently investigating whether and how Amazon influences the price-setting of third-party traders on the marketplace," Mundt said.

He indicated that after the COVID-19 pandemic erupted – and shoppers migrated online since so many physical stores had shut down -- complaints arose that Amazon had blocked some traders due to their allegedly excessive prices.

"Amazon must not be a price controller. This applies even now," Mundt said.

Mundt added that Amazon was cooperating with the agency’s investigation.

Deutsche Welle reported that Amazon has about 13,000 full-time workers in Germany, which ranks as the company’s second biggest market in the world after the U.S.

Amazon has denied the allegation.

“Amazon selling partners set their own product prices in our store,” a company spokeswoman said. “Our systems are designed to take action against price gouging.”

Reuters reported that until 2013, Amazon prohibited traders from selling their products on other online sites at a price that was lower than offered on its own site. Germany’s antitrust watchdog forced the company to abandon this practice.

In 2019, Amazon agreed with the German antitrust authority to change its terms of service for third-party merchants, which led the watchdog to cancel a prior seven-month investigation.

The new German investigation comes only one week after the Competition Bureau of the Canadian government said it will examine if Amazon is influencing competition and hurting customers and companies in Canada.

The bureau said its probe will look at any past or existing Amazon policies which may “impact third-party sellers’ willingness to offer their products for sale at a lower price on other retail channels, such as their own websites or other online marketplaces.”

In an appearance before the House Subcommittee on Antitrust, Commercial, and Administrative Law last month, Amazon CEO Jeff Bezos said the retail marketplace is big enough for many companies to compete and thrive.

“The global retail market we compete in is strikingly large and extraordinarily competitive,” Bezos said. “Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners.”

Bezos also pointed out that third-party sales now account for 60% of the items offered on Amazon.

“We didn’t have to invite third-party sellers into the store,” he said. “We could have kept this valuable real estate for ourselves. But we committed to the idea that over the long term it would increase selection for customers, and that more satisfied customers would be great for both third-party sellers and for Amazon.”