April 26, 2024, 6:17 am | Read time: 3 minutes
Amazon is a household name–and that’s precisely the problem. That’s why Amazon is under increased scrutiny by authorities.
When it comes to online shopping, Amazon likely comes to mind for many people without hesitation. This is not surprising, as the company has evolved over the years into the leading shopping platform on the internet. However, its market dominance is viewed critically–which is why Amazon is now under increased scrutiny.
Amazon under Increased Scrutiny After Failed Lawsuit
The reason is a decision by the Federal Cartel Office in July 2022. At that time, the federal authority determined that the well-known corporation has “overarching market significance for competition.” Consequently, Amazon was placed under increased scrutiny. The retailer attempted to challenge this in court.
As revealed in a press release from the Federal Court of Justice (BGH), Amazon failed in this attempt. In its ruling, the cartel senate of the Federal Court of Justice confirmed the Federal Cartel Office’s assessment. This paves the way for the authority to monitor the sales portal more closely in the future and intervene with regulations if necessary.
It’s About Fairness for Market Traders
According to Andreas Mundt, president of the Federal Cartel Office, the BGH’s ruling gives the cartel office “momentum” for ongoing proceedings against Amazon, as reported by Tagesschau. These aim to ensure more fairness for traders on the Amazon marketplace. It also assists in other proceedings by the office against companies such as Meta (formerly Facebook), Google, or Apple.
Amazon itself criticizes the decision: “The retail market, both online and offline, is very large and highly competitive. We do not agree with the court’s decision and will consider further legal remedies,” a spokesperson is quoted as saying.
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Amazon Is Simply Too Powerful
According to the ruling, Amazon is under increased scrutiny because the platform has extensive potential and resources. It is among those digital companies that can “significantly influence the business activities of third parties, distort the competitive process to their advantage, and extend their existing market power to new markets and sectors.”
Amazon is said to hold a “dominant position in the German market for online marketplace services for commercial traders” and have “superior access to competition-relevant data.” Additionally, the company has a “key position for retailers’ access to their sales markets and can exert significant influence on the distribution activities of third-party sellers.”
What Could Be in Store for Amazon and Customers
With the new ruling, the Federal Cartel Office now has various options it could implement if necessary. For instance, the authority could prohibit Amazon from favoring its in-house brand products in search results.
Third-party sellers in Germany can expect better sales conditions in the future, as they should not be artificially hindered in their success by Amazon in any way. Customers, in turn, could benefit from easier access to a more diverse selection during product searches and consequently better prices, should the cartel office decide to enforce such a change.
However, whether and when Amazon will be forced to make such changes under increased scrutiny remains to be seen.