UK and Germany double up on Amazon

Some days you just can’t get a break. Amazon was the recipient of not one but two pieces of bad news yesterday, with the UK Competition and Markets Authority (CMA) announcing that it has launched an investigation under the Competition Act 1998 into possible abuses of dominance by Amazon, and the German Federal Cartel Office (FCO) designating Amazon as a digital gatekeeper under its new regulatory regime.

It comes at a time when Amazon is reported to be close to completing an early resolution to the European Commission’s investigations into whether it breached EU competition laws. Below, we dissect the importance of the UK and German developments.

CMA’s investigation into Amazon


As is well known, the European Commission has been investigating Amazon since July 2019 for its collection and use of third-party seller data and it opened an additional investigation in November 2020 relating to the criteria Amazon uses for selection in its “Buy Box” and for eligibility to sell under the “Prime” label. As a result of Brexit, the UK market would no longer be covered by these investigations. It was therefore somewhat of an open secret that the CMA was considering what action it should take with respect to these practices.

Rather than waiting for the European Commission to conclude its investigation and seeing whether Amazon might be willing to extend any remedies imposed by (or agreed with) the Commission to the UK, the CMA has decided to open a full-blown investigation itself.

Taking into account reports that the Commission is about to market test commitments offered to it by Amazon, the CMA’s decision to open proceedings could mean one of three things: it wants Amazon formally to offer the same commitments for the UK (which is only possible if there are formal proceedings); it thinks Amazon’s commitments do not go far enough and therefore wants to insist on further measures; or it disagrees that this is an appropriate case for commitments, and wants to retain the possibility of imposing a large fine.

What the CMA is investigating and how it connects to other investigations

The CMA has announced that it is investigating:

  • How Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.
  • How Amazon sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’. The Buy Box is displayed prominently on Amazon’s product pages and provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
  • How Amazon sets the eligibility criteria for selling under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, that are only available to Prime users under Amazon’s Prime loyalty programme.

There are clear parallels with the two Amazon investigations the European Commission is carrying out, with the collection and use of marketplace seller data the subject of an investigation in which it issued a statement of objections in November 2020, and the criteria for Buy Box and Prime the subject of a further Commission investigation launched when that statement of objections was issued.

The EU/UK antitrust case against Amazon

Amazon has many activities today, but it is of course best known as an ecommerce platform. In that respect, it operates a marketplace where independent sellers can sell products directly to consumers, but it also sells products itself as a retailer. When it does so, it competes with the independent sellers active on its marketplace. It owns, operates and sets rules for the market, but it also competes on that market.

The cases at the Commission and the CMA must be seen in that context. When it comes to the use of third-party seller data (the Commission case opened in 2019), Amazon, as the marketplace owner, operator and rule maker, has access to confidential commercial data of independent sellers. This includes the number of ordered and shipped units of products, the prices at which sellers sell and the impact of price increases and decreases on sales, sellers’ marketplace revenues, the number of visits to their offers, shipping data, etc. The Commission is concerned that this sensitive data gives Amazon a competitive advantage over independent sellers. The data is available in large quantities to Amazon’s retail business and flows directly into its automated systems. Those systems aggregate the data and help Amazon calibrate its retail offers and strategic business decisions. This allows Amazon, for example, to focus its own offers on those products that are most popular, on the basis of sales data from third parties (the independent marketplace sellers) that is not available to others.

In the Commission’s provisional view, the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany – the biggest markets for Amazon in the EU.

Not much public information is available about the Commission’s concerns about Buy Box and Prime. However, the Italian competition authority (Autorità Garante della Concorrenza, or “AGCM”) imposed a fine of more than $1bn on Amazon in December 2021 about similar issues.

The AGCM took issue with the way Amazon leveraged its dominant position to get businesses who sell through Amazon Marketplace to adopt Amazon’s own logistics service. In particular, the AGCM was concerned about Amazon’s own logistics service called Fulfilment by Amazon (FBA). Sellers who sell products through can choose FBA to deliver the product to the consumer, but can also select competing logistics services. However, they only have access to certain Amazon benefits if they adopt FBA. The most important of these is the “Prime” label, which is only available to sellers who use FBA. The Prime label in turn allows participation in special events like Black FridayCyber Monday, and Prime Day – and increases the likelihood of a seller’s offer to be selected in the Buy Box.

According to the AGCM, this harmed competing logistics suppliers and other online marketplaces, since sellers who were induced to use FBA would be less likely to sell through other marketplaces due to the duplication of logistics costs.

It will now be interesting to see in what respects the Commission and CMA will take a different approach to their Italian colleagues. For one, the CMA has indicated that it is investigating Buy Box and Prime practices in the context of whether they give an unfair advantage to Amazon’s own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace. The AGCM, on the other hand, was concerned about harm to competing logistics suppliers and other online marketplaces.

In other words, the Italian investigation was interested in the impact of Amazon’s practices on providers of services that compete with Amazon’s own marketplace and logistics services, whereas the CMA’s investigation appears to be interested in the impact of those practices on third-party sellers that compete with Amazon’s own retail business. That is however not a matter of one authority being right and the other being wrong, rather it demonstrates how Amazon’s practices may have an impact at multiple levels of the value chain.

What comes next?

The Commission’s next steps will be very important. If, as is reported, it is about to market test commitments offered by Amazon, this would open the possibility of a “quick win” – that rarest of beasts in the antitrust enforcer world – for the CMA if Amazon simply extends the geographical scope of the commitments to post-Brexit Britain. However, there are some obstacles still in the way.

First, a market test can lead the Commission to drop the commitments route and pursue penalties, as happened in the Google Shopping case. Indeed, according to Regulation 1/2003, commitments are “not appropriate in cases where the Commission intends to impose a fine”. As the Commission’s Manual of Proceedings furthermore recognises, commitments have a “different precedent value” than infringement decisions and may have a “more limited deterrent effect” on other companies. Opting for commitments therefore carries a wider message from the Commission’s perspective: Amazon’s alleged infringements could be seen as less serious than those committed by other big tech firms that have been the target of penalties.

Second, it may of course be that the CMA is not interested in such a “quick win”. While it sometimes moves in concert with other regulators like the European Commission, there are other cases where it takes a different approach. One example is merger control, where the CMA has recently been considerably more interventionist than the Commission. It is possible that the CMA disagrees that the commitments go far enough or even that this is a good case for commitments at all. According to its guidance, commitments are not appropriate in case of a “serious abuse of a dominant position”, which “will typically include conduct which is inherently likely to have a particularly serious exploitative or exclusionary effect”. Accepting commitments would therefore mean the CMA does not view Amazon’s conduct as a “serious abuse of a dominant position”. That would stand in contrast to the AGCM’s penalty of more than €1 billion.

The case confirms that Amazon is high on competition authorities’ lists of priorities. And there are other areas of concern, as has been clear from lawsuits brought in the US. The CMA’s investigation opened today by no means precludes other investigations into Amazon being opened, and we have seen the CMA and European Commission launch several separate investigations into Apple and Google.

The CMA is also expected to launch a market study that would cover Amazon in preparation for the UK’s Digital Markets Unit regime. Indeed, a practice seems to be emerging at the CMA where the most serious conduct is investigated under the Competition Act (with fining powers), while it carries out market studies to get a wider picture of the sector (with the longer-term goal of imposing remedies that could change how markets operate).

The FCO proceedings against Amazon

Yesterday, the German Federal Cartel Office (“FCO”) formally designated Amazon as an undertaking of paramount significance for competition across markets (“UPSCAM”) pursuant to Section 19a of the German Competition Act.

Section 19a follows a two-step approach, namely designation and the adoption of a prohibition decision. The FCO has certainly not wasted any time in making use of this new tool; since January 2021, when Section 19a entered into force, it has also opened proceedings into the other big tech platforms and has recently designated Google/Alphabet and Meta/Facebook in decisions which are now final. The FCO has also opened proceedings into specific practices adopted by Apple, Google/Alphabet, and Facebook/Meta, which are ongoing.

The press release announcing Amazon’s designation refers to Amazon’s activities as a seller, e-commerce marketplace, and streaming and cloud service provider, which have all contributed to the creation of a digital ecosystem. The press release also refers to Amazon’s market share and revenues generated in Germany; Amazon’s power to impose terms and conditions on other sellers; and the integration Amazon has achieved by expanding into all levels of the supply chain (e.g., logistics, advertising, payment processing). There is nothing unusual or unexpected with respect to the above; the market position and financial strength of the undertaking concerned, its vertical integration, and the relevance of its activities for third party access to the market are all factors that the FCO should consider in determining whether a firm qualifies as UPSCAM. Yet, there are a few (arguably more) interesting issues arising from the press release that are worth taking a closer look at.

Starting from the relationship with “plain vanilla competition law”, it appears that Andreas Mundt was keen to clarify that, in addition to determining that Amazon qualifies as an UPSCAM, the FCO also “consider Amazon to be dominant in regard to its marketplace services for third-party sellers. The [FCO] can therefore also engage in parallel traditional oversight over abuse of dominance, on the basis of which proceedings against Amazon [are already being conducted]”. This statement is clearly related to two ongoing proceedings against Amazon that the FCO opened in 2021, which concern (a) the influence that Amazon exercises over the pricing of sellers on Amazon Marketplace by means of price control mechanisms and algorithms, and (b) the extent to which agreements between Amazon and brand manufacturers (e.g., Apple) exclude third-party sellers from selling products on Amazon Marketplace.

The finding (and statement) that Amazon is both an UPSCAM and a dominant undertaking illustrates how the FCO perceives the interaction between Section 19a and Section 19 (which prohibits abuses of dominance) of the German Competition Act; nothing prevents the FCO from applying the above provisions in parallel even in cases where conduct that could be prohibited under the former can also be caught by the latter. By means of example, the influence that Amazon exercises over third sellers’ pricing could fall under Section 19a(2)(2)(b).

It remains to be seen whether the European Commission will adopt a similar approach once the Digital Markets Act (“DMA”) enters into force. Under the DMA, the Commission is not required to define the relevant market(s) affected by the conduct under scrutiny; prove that the conduct in question generates anti-competitive effects; or assess efficiency justifications. Section 19a implies that the FCO is not altogether freed from identifying the relevant market that is affected by an UPSCAM’s conduct, whereas an UPSCAM may put forward objective justifications for its practices. These differences may indicate that, contrary to the FCO, what the Commission will be able to achieve under the DMA, it will not pursue through Article 102 TFEU proceedings.

In addition, the FCO’s designation of Amazon reminds us of the issues that may arise from the interplay between the DMA and national rules prohibiting unilateral conduct, such as those introduced by Section 19a. Article 1(4) of the DMA lays down that it is without prejudice to “(a) national competitionrules prohibiting anti-competitive agreements, decisions by associations of undertakings, concerted practices and abuses of dominant positions; [and] (b) national competition rules prohibiting other forms of unilateral conduct insofar as they are applied to undertakings other than gatekeepers or amount to the imposition of further obligations on gatekeepers”.  Section 19a would presumably fall under (b).

This raises two questions. First, once the DMA enters into force, could Section 19a be enforced to sanction the same form of unilateral conduct covered by the DMA? Article 1(4) seems to establish that the DMA would prevail over Section 19a in cases where the same practice falls under the scope of both instruments; a narrow interpretation of the provision would mean that the FCO could make use of Section 19a to prohibit practices other than those tackled by the DMA (and subject to the condition that those lead to additional obligations imposed on gatekeepers/UPSCAMs). Second, if a national competition authority opens proceedings based on Article 102 TFEU (as the FCO have already done with Amazon), could those proceedings trigger the application of the ne bis in idem principle if the same conduct is prohibited by the DMA? In our example, the FCO’s investigation into Amazon’s influence over the pricing of sellers on Amazon Marketplace could, for instance, be caught by Article 5(3) and (4) of the DMA. Moreover, the Court’s recent judgments in bpost and Nordzucker leave room for the ne bis in idem principle to apply under certain conditions in cases dealing with the same practices.

The above questions are far from easy to answer, and they simply illustrate some of the challenges that arise from the enforcement of the DMA and the initiatives undertaken by active competition agencies seeking to fight the harmful practices of big tech platforms. 

Konstantina Bania and Stijn Huijts, Geradin Partners. Photo by Daniel Eledut on Unsplash.

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