In October 2020, the Federal Cartel Office (“FCO”) initiated an investigation against Amazon’s and Apple’s agreement to exclude non-authorized dealers from selling Apple products on the Amazon Marketplace. While the FCO has not published a press release about the proceedings yet, the investigation is expected to focus on whether combatting product piracy justifies this practice.
Amazon is the largest online retailer and the largest online marketplace in Germany. To combat product piracy, Amazon offers manufacturers and brand owners the option to exclude unauthorized third-party dealers from the German Amazon Marketplace, so-called brand-gating. The FCO takes issue, that—in certain cases—Amazon provides brand-gating services only if Amazon itself is approved as an authorized dealer in return. At least for some brands, all dealers except Amazon and the respective brand manufacturer are excluded from Amazon Marketplace.
With respect to Apple, Amazon excluded all non-authorized dealers since 2019 and Amazon itself has become an authorized Apple dealer. The FCO investigates whether Amazon and Apple’s cooperation excludes third-party sellers and whether the behavior is justified.
The FCO could review the brand-gating agreements either as potentially anticompetitive agreements or as a potential abuse of dominance.
In the past, the FCO investigated Amazon’s terms and conditions vis-à-vis Marketplace sellers as an abuse of a dominant position. However, the FCO did not arrive at a final conclusion concerning market definition or Amazon’s alleged dominance, as it terminated its proceedings after Amazon had committed to make changes to its business terms.
Similarly, the Regional Court of Frankfurt found in an interim decision that Amazon’s exclusion of an unauthorized merchant who sold original, albeit used, Apple products was abusive. In the court’s view, Amazon was sufficiently likely to be found dominant with respect to online marketplace services in Germany and the ban of non-authorized resellers to be abusive, as it directly reduced competition and Amazon had failed to justify its behavior. The court did not accept the fight against piracy or an agreement between Apple and Amazon to justify a ban of all unauthorized resellers. The court did not analyze the cooperation between Amazon and Apple. Instead, it considered the legality of Apple’s distribution model to be irrelevant for a finding of Amazon’s abuse.
The opening of the investigation ties in with the FCO’s wider concerns with Amazon’s gatekeeper position as operator of the Marketplace. In April 2020, the FCO had received complaints alleging that Amazon stocked its warehouses with high-demand everyday goods to the detriment of other suppliers, and in August 2020, the FCO launched an investigation regarding Amazon’s alleged interference on the price setting of third- party dealers in the Marketplace.