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BWB informs: Amazon modifies its terms and conditions

Over the past three years, the Austrian Federal Competition Authority (BWB) has received several complaints about unfair trade practices of Amazon Services Europe S.à.r.l. (Amazon) towards Austrian retailers being active on the Amazon marketplace.

In December 2018, the Austrian Retail Association (Handelsverband) filed a complaint on behalf of several marketplace sellers relating to trade practices of Amazon towards them.

It is important to ensure a ‘fair play’ between dominant companies and small retailers. The modification of Amazon’s terms and conditions are to be appreciated. Immediate suspensions of seller accounts will not be possible any more. The BWB will monitor the modified terms and conditions”, says Dr. Theodor Thanner, Director General of the BWB.

The BWB opened investigation into the U.S. online shopping giant resulting in a modification of the following terms and conditions of its Business Solutions Agreement(BSA):

  • Immediate terminations / suspensions of seller accounts (even without justifications):

Amazon may limit, suspend, or terminate the Seller’s access to the Platform with 30 days’ notice. Amazon may terminate immediately only if

(a) Amazon determines that the seller has materially breached the Agreement and failed to cure within 7 days of a cure notice;

(b) the seller or his account have been engaged in deceptive, fraudulent, or illegal activity; or

(c) the seller’s use of the Selling Partner APIs and the API Materials may harm Amazon’s customers.

  • Granting of free, worldwide, perpetual, irrevocable right and license to use materials provided by the Seller:

The right and license has been limited to the duration of the seller’s original and derivative intellectual property rights.

  • Indemnification of Amazon:

Sellers position has been improved as they will defend, indemnify, and hold harmless Amazon against any third-party claim, loss, damage, settlement, cost, expense, or other liability (including, without limitation, attorneys’ fees) (each, a “Claim”) arising only from Seller’s non-compliance with applicable laws.

  • Disclaimer:

Disclaimer has been removed from the Agreement.

  • Modification of the Agreement:

Amazon will provide at least 15 days’ advance notice for changes to the Agreement.

  • Applicable law and jurisdiction:

Any dispute relating in any way to the use of the Services or the Agreement will be adjudicated in the courts of the district of Luxembourg City, Luxembourg non-exclusively.

  • Compensation in accordance with the FBA Guidelines for the applicable Amazon Site:

Disclaimer relating to the FBA Guidelines for the applicable Amazon Site has been removed.

  • Seller’s time limit to disagree with Amazon’s findings on customer refund:

Amazon will promptly notify Sellers when they are responsible for a customer refund. Sellers may appeal if they disagree with Amazon’s finding within thirty days after notification.

Results of the BWB investigation proceedings

The BWB received a large number of complaints about unfair trade practices of Amazon Services Europe S.à.r.l. (Amazon) towards Austrian retailers. The BWB confronted Amazon with the reproaches and gave Amazon the opportunity to comment on the complaints.

Amazon agreed to modify several terms and conditions of the BSA. These modifications will remove some of the competitions concerns of the BWB. The BWB will continue monitoring some aspects relating to communication and logistics, which remain subject to further investigation by the BWB. 

Another aspect of the complaints is the deficit in communication with Amazon. Sellers have complained that there is no reliable support. The BWB suggested Amazon to appoint a contact person for the sellers.

The submitted complaints relate to the BWB’s recently published Guidance for fair conduct in business which intends to inform market participants and prevent breaches of good conduct. It constitutes BWB’s current legal opinion and is not binding on Austrian courts, other authorities or European institutions. Moreover, on 14 June 2019 the Council of the European Union adopted the Regulation to address relations between online platforms and businesses (Regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services). The Regulation was published in the Official Journal on 11 July 2019. Austria is required to take measures that are sufficiently dissuasive to ensure that the online intermediation platforms and search engines comply with the requirements in the Regulation.

The investigation proceedings

In February 2019, the BWB decided to initiate investigation proceedings concerning suspected infringements of Austrian and European Competition Law. The German Bundeskartellamt and the European Commission had launched an investigation into Amazon. The investigation of the European Commission focuses onAmazon's dual role of merchant and platform and on how Amazon uses data on its third-party merchants that sell through Amazon. The BWB coordinates its investigation with the European Commission and works closely with the German Bundeskartellamt in accordance with the Council Regulation (EC) No 1/2003, which ensures that the Commission and the competition authorities of the Member States form a network of public authorities applying the Community competition rules in close cooperation.

Complaints against trade practices

The complaints concerned the Amazons’ terms and conditions of the BSA for sellers on the marketplace. Amazon was suspected to discriminate against retailers in order to favor its own products on the Amazon marketplace. The Austrian Retail Association filed a complaint on behalf of several marketplace sellers. In the course of the following months, the authority received several submissions by individual sellers on the Amazon marketplace. Questionnaires have been sent out to the 400 largest Austrian sellers on the Amazon.de marketplace.

The complaints concerned, inter alia, the following aspects:

  • Immediate terminations / suspensions of seller accounts (even without justifications)
  • Granting of free, worldwide, perpetual, irrevocable right and license to use materials provided by the Seller
  • Far-reaching limitations of liability
  • Deficits in communication and no reliable support
  • BSA (terms and conditions) can be changed at any time without notification to sellers
  • Choice of law and jurisdiction solely in Luxemburg
  • No proper inventory tracking when using FBA (Fulfillment by Amazon)

Market enquiry

The BWB has carried out a market enquiry and has sent out questionnaires to the 400 largest Austrian sellers on the Amazon.de marketplace. More than 80% of the addressed retailers have submitted the requested information to the BWB. The market survey has come to the conclusion that Amazon.de marketplace holds a dominant position as an online retail intermediary for Austrian sellers:

  • Austrian sellers do not have any alternative to selling on amazon.de.
  • Among those stating to have a relevant alternative, most of their total turnover is earned on Amazon.de
  • Austrian sellers would not switch to another marketplace if Amazon increases the retailers fee.
  • Many sellers sell only on amazon.de.
  • Only few retailers mention their own webshop or brick and mortar stores to be an alternative to selling on amazon.de.

Case report

Case Report Amazon