Hybrid platforms: Amazon’s hybrid position as a retailer and operator of its marketplace in the focus of the competition authorities

In autumn 2018 the European Commission and the German Bundeskartellamt (Federal Cartel Office) started almost in parallel investigations against Amazon regarding its online commercial platform “Marketplace”.

With its retail platform, Amazon is the worldwide largest online retailer with a range of more than 250 million different products. Whereas a part of this product range is sold by Amazon itself in its own name other products are sold by more than 2 million independent third-party sellers that use the Amazon Marketplace as a retail platform for their online trading businesses (against the payment of a commission fee to Amazon). These retailers and manufacturers benefit from Amazon´s reputation as well as its enormous customer base. In addition, these third-party sellers can take advantage of further Amazon services like its warehouse service and billing systems.

The dual role of Amazon, however, as a retailer on the one hand and as an operator of the online retail platform “Amazon Marketplace” on the other hand is the starting point for the investigations of the European Commission and the Bundeskartellamt. Whereas the European Commission’s investigation focuses on the usage of the transaction data of the third-party sellers by Amazon the Bundeskartellamt analyses whether Amazon is abusing its market position in Germany by its terms of business and practices towards third-party sellers.

The European Commission

The preliminary investigation by the European Commission is focused on the generation and usage of transaction data by Amazon. According to the Commission Amazon collects and analyses various customer data (personal data, search data, usage data etc.) and sales data of its own sales but also of the sales of the third-party sellers (sales figures, prices, stocks, suppliers etc.). Some sellers accuse Amazon of using this data in an abusive way to advantage its own sales and to disadvantage the competing sellers on its platform e.g. by adding successful products of third-party sellers to its own product range. Regarding this data collection the European Commission has sent a binding and extensive request to affected third-party-sellers. The survey is part of a preliminary investigation of the European Commission so there is no further information publicly available about the European Commission’s approach. “It’s too early to have a concern (…)” said Margrethe Vestager, the European Commissioner for Competition.

The German Bundeskartellamt

Complementary to the investigation by the European Commission the German Bundeskartellamt is looking at Amazon’s terms of business and practices towards sellers on its German marketplace “amazon.de”. The Bundeskartellamt is of the opinion that Amazon is a “gatekeeper” and many retailers and manufacturers in Germany depend on the reach of Amazon’s marketplace for their online sales. Following several complaints from third-party sellers regarding the business terms of Amazon, the Bundeskartellamt is now investigating if Amazon has a dominant market position and/or a position of relative or superior market power in the sense of Section 20 of the German Act against Restraints of Competition. If so, the Bundeskartellamt will assess whether Amazon abuses its market power against the third-party sellers by using its terms and conditions.

What´s next?

Even though Amazon is faced with two competition law investigations by two of the most powerful competition authorities in Europe it is not reasonable to expect that these investigations will influence the dual role of Amazon as a retailer and operator of a retail platform for independent sellers itself. These investigations just show that Amazon has a market position that attracts the attention of competition authorities. However, the German legislator is currently preparing the 10th amendment of the German Act against Restraints of Competition and the European Commission has just started the preparations of the amendment of the Vertical Block Exemption Regulation. In both cases it can be expected that regulations regarding the online retail sector will be included. Therefore, in this regard these investigations may become of higher importance.