In response to the competition concerns expressed by Germany’s anti-trust authority Bundeskartellamt, Amazon is amending its terms of business for sellers on Amazon’s online marketplaces.
Amazon is the largest online retailer for many product categories and operates by far the largest online marketplace in Germany. In November 2018, following a large number of complaints from sellers, the Bundeskartellamt initiated abuse of dominance proceedings against Amazon to examine its terms of business and practices towards sellers on its German marketplace amazon.de. The Bundeskartellamt has now terminated its proceedings following the amendments made by Amazon.
Amendments in detail:
Until now Amazon was practically exempted from any liability towards sellers. There will now be a limitation in Amazon’s exclusion of liability in favour of the sellers. The terms will also be more narrowly defined. In the future Amazon will be liable to the same extent as sellers for intent or gross negligence for any breach of major contractual obligations. This will bring Amazon’s liability rules for the European marketplaces in line with European standards for Business to Business Relations (B2B).
Termination and blocking of accounts:
As yet Amazon has had an unlimited right to immediately terminate and block sellers’ accounts without justification.
In the future an ordinary termination of an account will require a 30 days’ notice. In the case of an extraordinary termination (based on the alleged legal infringements by a seller) and the blocking of a seller’s account, Amazon is now obliged to inform the seller and provide reasons for such measures.
Court of jurisdiction:
Until now Luxembourg was specified as the only court of jurisdiction in the European terms of business applying to the marketplace as well as in the European terms of business for payment transactions. This provision made it difficult, in particular for smaller sellers, to even attempt to seek legal action.
The exclusivity of Luxemburg as the only court of jurisdiction is now removed from the terms of business for all European marketplaces. Under certain conditions, domestic courts can be the competent court of jurisdiction in future.
Returns and reimbursements:
Nothing will change for customers. Amazon’s rules on returns and reimbursements for customers will remain unaffected by the amendments.
So far sellers have had to unilaterally bear the costs and other consequences of a decision by Amazon to reimburse the customer. If they consider that the return was unjustified, they can pursuant to the new rules object it and are entitled to compensation from Amazon pursuant to the new regulations.
Product information and rights of use:
Until now sellers have had to grant Amazon very extensive rights to use their own product material such as information, descriptions, images etc. Sellers also had to provide Amazon Marketplace with product material of the same high quality as the one that they use in other sales channels.
Regarding the rights of use of product information, the amendments include improvements and clarifications to the sellers’ benefit. Now Amazon’s rights of use will be limited to certain purposes. The so-called “parity requirement” will no longer apply. In the future it will be possible to use material of higher quality or more specific product information and descriptions/images on other websites. However, Amazon’s Amazon will still be able to impose requirements with regard to the quality of the product material on its Marketplace. These amendments will enhance the ability of sellers and manufacturers to compete with Amazon Marketplace using their own websites.
Until now sellers were only allowed to make public statements about their business relations with Amazon with Amazon’s written prior approval.
This clause will now be significantly reduced.
The Bundeskartellamt made it easier in future for sellers to identify applicable rules and regulations in the first place. In the future these will be more easily traceable. Any changes will be announced with 15 days’ notice.
Product reviews and sellers ratings:
Many sellers also complained about Amazon’s practice with regard to product reviews. They criticised that Amazon prefers its own sales as a retailer (Amazon Retail) compared to sales by Marketplace sellers, particularly because product reviews obtained from external providers are removed from the platform. Amazon argued that there is a considerable risk of fake and manipulative reviews and stated that it is willing to address the fundamentals of the problem. In particular, Amazon’s own “Vine” rating programme, which was previously available only to suppliers of Amazon Retail, will be gradually made available to those marketplace sellers which own a brand name registered with Amazon.
The Bundeskartellamt has therefore refrained from making further requirements regarding the rules for product reviews also in view of its current sector inquiry into “online user reviews” and the EU Commissions’s current inquiry against Amazon.
The changes will apply not only to Germany, Amazon’s No. 2 market after the United States, but also to its marketplaces in Britain, France, Italy and Spain , as well as its other worldwide sites in America and Asia, the German regulator said.
Amazon said the changes to its Business Solutions Agreement, to take effect in 30 days, would clarify the rights and responsibilities of selling partners that account for 58% of physical merchandise sales on its platform.
Silicon Valley’s tech giants have come under intense scrutiny, with Alphabet’s Google hit with billions of euros in fines for breaches of European Union competition rules. The EU executive may open a full anti-trust probe into Amazon within days.
Germany’s anti-trust regulator has also ordered Facebook to change how it handles user data after finding the social network abused its market dominance.