Antitrust regulators in Germany have warned Amazon over its pricing practices

Antitrust authorities in Germany have warned e-commerce giant Amazon that its price control for retailers on its market place breach competition laws in the country and across the EU.

The company uses algorithms and statistical models to calculate price caps for products, which the Germany watchdog feels might be contrary to competition laws. The regulator said Amazon’s pricing control limits merchants’ products and “based on non-transparent marketplace rules.”

Amazon must align with Germany and EU laws

Amazon, together with other US tech giants have faced increasing scrutiny from regulators in the EU and globally over their dominance in e-commerce and data-driven practices.

According to Bloomberg, the Federal Cartel Office told Amazon that the company’s policing of how much retailers charge was not aligned with both the EU and national regulations for the digital economy and fair competition.

The e-commerce giant forces third-party sellers who use its platform to keep prices within the limits it sets.

“Competition in the online retail business in Germany is largely determined by Amazon’s rules for the platform,” Andreas Mundt, the regulator’s president, said in a statement on Monday.

“Since Amazon competes directly with other retailers on its platform, influencing competitors’ pricing, including caps, is generally questionable from a competition perspective.”

Mundt.

The regulator also revealed that products that are flagged for having prices that are too high or “prices that are not competitive” can be demoted in search results, excluded from advertising or totally removed from the buy box.

The buy box is a list that pops up immediately when a visitor clicks on some particular products, and the one that gets purchased when a shopper taps “add to cart.”

Amazon’s pricing tactic a threat to stakeholders

According to the authorities, the e-commerce giant’s pricing practices are a threat to sellers’ businesses and may also be harmful to other retailers by deterring them from offering lower prices. Amazon accounts for about 60% of online retail revenue for Germany.

However, Amazon disagrees with the Cartel Office’s preliminary findings. Its spokesperson added that any changes to the company’s pricing mechanism would be “bad for customers and selling partners.”

“If Amazon is prevented from helping people find competitively priced offers, it will lead to a bad shopping experience for them, as we’d need to promote uncompetitive or even abusive pricing in our store.”

Amazon spokesperson.

“This would mislead customers into thinking they’re getting good value when, in reality, they’re not,” added the spokesperson in a statement.

According to CNBC, Amazon can provide feedback to the Cartel Office on its preliminary assessment before it makes its final decision.

In 2022, Amazon reached a deal with the EU antitrust regulators who were investigating it over the use of seller data and buy box practices. The company reportedly agreed to show a second buy box on products sold in Europe when there is a second competing offer that’s different in price or delivery as part of the settlement.

But that’s not all, as the company faces other allegations of anti-competitive behavior in the US. The US Federal Trade Commission is also investigating Amazon’s use of pricing algorithms on its third-party marketplace as part of a wide-ranging antitrust lawsuit filed in 2023. The company has dismissed the matter, saying the FTC’s complaint is “wrong on the facts and the law.”

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