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Publication

Terms and conditions violate Antitrust Law

19/07/2019

Locations

Germany

Proceedings against Amazon by the German Competition Authority

On 17 July 2019, the German competition authority, the Bundeskartellamt (BKartA) announced that Amazon had agreed to adapt its online marketplace terms and conditions. This marks the termination of proceedings, initiated in November 2018, against Amazon, on the grounds of suspicion that there was abuse of a dominant market position.

Background and Commitments made by Amazon

Amazon operates the largest online marketplace in Germany and is the largest online retailer in an extensive range of product groups. Consequently, there is significant reliance by traders on this marketplace. Their Business Solution Agreement governs relationships between Amazon and traders engaging on the platform.

Amazon has committed itself to changing its terms and conditions, which govern the marketplace to the BKartA because of the proceedings. The application of these changes will not be limited to Germany. The following changes will be implemented:

  • There will be a reduction of the available limitations to liability for Amazon, in favor of traders.

  • Termination by Amazon will be subject to a required notice period of 30 days (for ordinary termination) and in other cases, (non-ordinary) Amazon has an obligation to justify its decision and provide information to the terminated party.

  • Luxembourg is no longer the exclusive place of jurisdiction; it is possible that traders' national courts can also have jurisdiction.

  • In the event of (allegedly) unwarranted returns, dealers now have a right to object and possibly claim compensation.

  • Traders will now have the possibility to use other websites to provide additional, more precise information about their products. However, Amazon reserves the right to require a certain minimum standard of information presented.

  • Contrary to previous obligations, traders will now be able to make public statements about Amazon.

  • Changes to rules and related announcements will now be more accessible and in that regard, there will be more transparency.

  • The system for product reviews and seller evaluations is also due to be reformed.

These changes will only affect the relationship between Amazon and traders operating on the platform; end users will remain unaffected by the changes. They are set to take effect within 30 days.

Consequences and reactions

According to the BKartA president: Andreas Mundt, this development will lead to "world-wide and far reaching improvements" for traders who operate on the Amazon marketplace. The result of this agreement is the cessation of the proceedings, which began in November 2018. The BKartA initially received complaints about the concerned terms and conditions not only from within Germany, but from all over the World. The BKartA had consulted the European Commission and other national competition authorities as a part of the proceedings.

Amazon remains in the eye of competition authorities: the BKartA is conducting an inquiry into the area of 'user evaluation', the European Commission is investigating the use and protection of data by Amazon as well as any connected side effects on the marketplace traders.

Note

The BKartA has essentially identified Amazon's behavior as exploitative abuse. According to the BKartA, Amazon, as a dominant company, has abused its position through its business practices. Accordingly, a violation of law governing General Terms and Conditions can constitute a violation of antitrust law, if this violation additionally encroaches upon antitrust concerns.

 

Links

BKartA press release, July 17, 2019

Case report of the BKartA, 17 July 2019

Press release of the BKartA on the initiation of the abuse procedure, 29 November 2018

BKartA press release on the sector inquiry on user ratings, May 2019

Commission press release on the proceedings against Amazon, July 2019

 

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