On July 17, 2019, the FCO terminated its abuse proceedings into Amazon.com, Inc.’s (“Amazon”) German online marketplace, Amazon.de, after Amazon had committed to making several changes to its business terms towards sellers on its marketplace. The commitments apply not only to Amazon’s business terms in Germany, but also worldwide on all its marketplaces.
The FCO initiated the investigation in November 2018 following more than 100 complaints from marketplace sellers offering products on Amazon’s marketplace. These complaints concerned several clauses of Amazon’s business terms towards sellers, the so-called Business Solutions Agreement (“BSA”). In the course of its seven- month investigation, the FCO liaised closely with competition authorities in- and outside of Europe, in particular with the Austrian competition authority and the European Commission.
In December 2018, the Austrian competition authority launched a similar investigation into Amazon’s practices vis-a-vis Austrian marketplace sellers, and closed it without a formal decision on the same day as the FCO’s investigation. Also on the same day, the European Commission opened a formal investigation into Amazon’s use of sensitive seller data and whether Amazon is abusing its dual role as the largest online marketplace operator and the largest seller.
The FCO’s Preliminary Findings
The FCO did neither conduct an in-depth investigation nor did it issue a formal decision as Amazon’s commitments eliminated the FCO’s preliminary concerns regarding Amazon’s allegedly abusive conduct. Nonetheless, the FCO published a case summary that outlines its preliminary findings.
Dominant Market Position
The FCO did not arrive at a final conclusion concerning market definition. However, the FCO was at least inclined to assume a two-sided market for the provision of online marketplace services to sellers (who seek to sell products) on the one side and consumers (who seek to search for and buy products) on the other.
Also in terms of Amazon’s alleged dominance, the FCO did not arrive at a final conclusion, but established some preliminary findings:
First, Amazon is not only the largest seller in Germany, but also acts as the largest online marketplace in the country. As such, Amazon acts as a gatekeeper to consumers who purchase their products online. The FCO also referred to market studies according to which Amazon’s marketplace accounts for significantly more than 40% of the German online sales. In 2018, Amazon and third-party sellers sold more than 1.3 billion products to 37 million customers via Amazon.de. Amazon’s retail branch accounted for about 40-45% of this total sales volume, whereas around 300,000 third-party sellers accounted for the remaining 55-60%.
Second, the FCO left open whether Amazon enjoyed “relative” market power, i.e., whether smaller or medium-sized sellers depend on Amazon’s marketplace and cannot choose to conduct their business through another marketplace. While Amazon acts as a gatekeeper, the FCO, however, also found that smaller sellers may only have entered the online sales business because Amazon’s marketplace provided them with the opportunity and necessary tools to do so.
The FCO only conducted a preliminary analysis whether any clauses in Amazon’s BSA, individually or as a whole, amounted to a form of exploitative or exclusionary abuse under German law. The FCO stated, but did not further elaborate, that it also considered the application of the European abuse of dominance provisions. Further, the FCO applied the same test and referred to the same FCJ precedents as in its (recently suspended) Facebook prohibition decision (and referred to that, too) as a legal basis for its position that inappropriate contractual terms and conditions agreed upon in an imbalanced negotiation, and therefore infringing German civil law or constitutional rights, could constitute an exploitative abuse under German competition law.
The FCO found that Amazon’s application of possibly inadequate contractual terms and conditions may have been exploitative as these clauses had the potential to restrict and threaten other sellers’ economic activity on Amazon’s marketplace. In this regard, the FCO did not analyze the effects of each individual clause separately but the cumulative effects of all clauses as a whole.
In addition, the FCO came to the preliminary conclusion that some clauses also resulted in an exclusionary effect on sellers because these clauses might provide Amazon with the opportunity to improve its own position as a seller at the expense of competing sellers selling via Amazon’s marketplace.
Amazon’s Changes To The BSA
In order to address the FCO’s preliminary concerns, Amazon committed to make the following changes to its BSA within 30 days:
More transparency. Amazon made its business terms and guidelines more easily accessible for sellers. Amazon also pledged to announce any changes to its business terms at least 15 days before their implementation.
Choice of law and forum. Previously, the BSA provided for exclusive jurisdiction of the courts of Luxembourg. Amazon has now included domestic courts, depending on the circumstances. To ensure that the legal framework remains consistent across Amazon’s marketplaces in Europe, the FCO, however, accepted that Luxemburgish law will continue to govern the contractual relations between Amazon and third-party sellers.
Liability. So far, the BSA basically excluded any liability by Amazon vis-a-vis sellers, whereas the latter were obliged to indemnify Amazon from any claims from third parties. Going forward, Amazon’s liability will be less restricted and the third-party sellers’ indemnity obligation less comprehensive.
Account termination and suspension. The new BSA makes it harder for Amazon to terminate or suspend sellers’ accounts without justification. Going forward, an ordinary termination will require a 30 days’ notice. Amazon will generally only be able to suspend a seller’s account with immediate effect if it provides sound reasons for such a measure (the FCO acknowledged that Amazon must be able to lock fraudulent sellers’ accounts immediately due to product customer interests).
IP rights and product materials parity requirements. Under the old BSA, sellers were required to grant Amazon extensive rights of usage to the texts and pictures they used on Amazon.de. In addition, the materials that sellers used on Amazon.de had to be equal in quality to the highest grade materials that they used in any other sales channel. In the FCO’s preliminary view, these two provisions exposed sellers to potential conflicts: On the one hand, they were required to provide product materials for which they might not necessarily be able to grant the required usage rights to Amazon. On the other hand, they had the obligation to indemnify Amazon, in case that the actual owner of the IP rights to these materials cracked down on Amazon. The new BSA therefore limits the scope of how IP rights are granted and their duration. In addition, even though Amazon agreed to waive the old product materials parity requirement, it will still be able to define quality standards for product information material.
Returns and reimbursements. While nothing will change for consumers, sellers may object to Amazon’s reimbursement decision within 30 days. Amazon will have to bear the refund risk in the relationship with the seller.
Product reviews. In the future, Amazon will make its Vine Rating Program available to those sellers that own a brand name and will launch its Early Reviewer Program also in Europe. The FCO generally sees a considerable risk of abusive, false, and/or manipulative use of customer reviews. However, in light of its soon to be concluded sector inquiry into online user reviews, the FCO refrained from making additional suggestions.
Public statements. Amazon no longer requires sellers to obtain its prior written approval for any public statements by the seller.
The FCO stressed that, while Amazon’s cooperation and commitments helped to conclude the investigation swiftly, Amazon will, nonetheless, remain under scrutiny. The FCO is willing to reopen proceedings in case Amazon does not comply and properly implement the changes to its BSA. Interestingly, the FCO relied in its preliminary assessment on its own decisions against Facebook and Booking.com, which only recently were suspended or annulled by the DCA. While the DCA’s judgments do not affect this investigation, as the FCO closed it without a formal decision following Amazon’s commitments, the DCA’s judgments might become relevant should the FCO reopen proceedings due to Amazon’s non- compliance with the commitments or following new complaints by the sellers.
On the day the FCO closed its probe, the European Commission opened a formal investigation into Amazon’s use of sensitive independent seller data that may potentially breach Article 101/102 TFEU.
Already in 2016, the Commission had started its investigation into Amazon’s collection and use of transaction data and sent questionnaires to a large number of retailers in 2018. Addressing additional complaints by sellers, the Commission’s investigation looks into Amazon’s dual role as seller and platform operator. In particular, the Commission investigates (i) whether and how Amazon uses accumulated seller data collected on its marketplace platform to potentially leverage its own position, and (ii) how Amazon decides which sellers will appear in the “Buy Box,” a box allowing Amazon’s and some sellers’ customers to purchase a product with a single click.
 The FCO’s case summary is silent on the geographic market definition but generally refers to Amazon’s activities in Germany.
 Section 18(4) of the German Act against Restraints of Competition (“ARC”) provides for a (rebuttable) presumption of single dominance where a single company has a market share of at least 40%.
 I.e., clauses regarding account termination and suspension, rights of usage and product materials parity requirements, product reviews, and European delivery schemes.
 The changes to the BSA entered into effect on August 16, 2019.
 Already in 2013, Amazon eliminated its price parity clauses for sellers using its marketplace following a FCO investigation. Concerning the rationale for waiving the old product materials parity requirement, the FCO referred to its 2015 decision prohibiting hotel booking platform operator Booking Holdings from using narrow price parity clauses; which was only recently annulled by the DCA on June 4, 2019.
 For its Vine Rating Program, Amazon invites customers to join its club of product testers based on their product review record. According to Amazon, it invites in particular such customers whose previous reviews have been considered helpful by other customers. Amazon claims that the program is supposed to incentivize trustworthy and reliable product reviews for its customers. Amazon’s Early Reviewer Program is, so far, only available in the U.S. According to Amazon, the program’s goal is to provide brand owners with the opportunity to acquire early reviews for their products and customers better guidance. If a brand owner chooses to participate, Amazon randomly selects customers that have purchased the product and offers them a small reward for writing a review.
 For more details, see our articles on the DCA’s Facebook decision of August 26, 2019 in this newsletter on p. 1 et. seq., and on the DCA’s Booking decision of June 4, 2019 in the German Competition Law Newsletter May – June 2019, p. 4 et. seq., available here.