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Summary:

Amazon forbids third-party merchants that use its marketplace from offering the same goods cheaper elsewhere, and the German Federal Cartel Office is gearing up to do something about it.

Amazon Package
photo: Flickr / William Christiansen

Amazon isn’t having much luck in Germany at the moment. Just one week ago, it found itself accused of employing a security company with neo-fascist links at its distribution centers there (it sacked the company in question quite quickly) and now it’s attracted the attention of the country’s antitrust authorities.

The Bundeskartellamt (Federal Cartel Office) is looking into complaints about the “price parity clause” that Amazon imposes on its third-party merchants. The clause forbids the merchants from selling goods they sell on Amazon cheaper elsewhere online, including on eBay and through their own sites.

“Amazon’s price parity clause, under which sellers are deprived of their freedom to sell a product offered through Amazon cheaper on another internet sales channel, could violate the general ban on cartels,” Bundeskartellamt president Andreas Mundt said in a statement.

“This applies in particular if the restriction of the sellers’ freedom to determine prices also restricts competition between the different internet marketplaces. Such a restraint of competition seems likely as, under normal circumstances, sellers have an interest in offering their products on several internet marketplaces.”

The authorities have identified two particular problems with this setup: first, that it makes it very hard for new marketplaces to challenge Amazon, and second, that Amazon can therefore charge higher seller fees than necessary, hurting the consumer.

To find out more, the Bundeskartellamt is now surveying 2,400 third-party Amazon merchants. If this confirms what it suspects, it will very likely force Amazon to remove the price parity clause from its terms in Germany.

This is hardly the first time that people have complained about Amazon’s price parity clause, which was introduced a few years ago. In the UK, the Office of Fair Trading said in 2011 that it was looking into complaints about the clause as applied to e-books, but it didn’t open a formal investigation. Apple’s EU e-book antitrust inquiry also had to do with a similar clause, which the European Commission forced it to scrap.

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  1. A price parity clause is standard for all aspects of the American digital book business. That’s why epublishers can’t offer a lower price on their websites than is offered at places like Amazon Kindle.

    Some years back, one of my publishers was banned from Fictionwise because it offered a few books cheaper on its site than Fictionwise.

    If laws did away with the price parity clause, the big distributors would still win because places like Amazon runs a constant search comparing prices. A friend was caught by this when she offered a free sampler of one of her novels that consisted of a few chapters and some extra material, NOT the whole book, and she discovered to her horror that Amazon’s search engine had decided she was giving the book away for free so her book was now free on Amazon. It took her months and thousands of dollars in lost sales before Amazon corrected the problem.

  2. A price parity clause is standard for all aspects of the American digital book business. That’s why epublishers can’t offer a lower price on their websites than is offered at places like Amazon Kindle.

    Some years back, one of my publishers was banned from Fictionwise because it offered a few books cheaper on its site than Fictionwise.

    If laws did away with the price parity clause, the big distributors would still win because places like Amazon runs a constant search comparing prices. A friend was caught by this when she offered a free sampler of one of her novels that consisted of a few chapters and some extra material, NOT the whole book, and she discovered to her horror that Amazon’s search engine had decided she was giving the book away for free so her book was now free on Amazon. It took her months and thousands of dollars in lost sales before Amazon corrected the problem.

  3. HI just read your article

    “GERMAN CARTEL OFFICE PROBES AMAZON’S PRICING POLICY FOR TRADERS”

    http://www.lloyds.com/news-and-insight/news-and-features/dow-jones/article/14536/german-cartel-office-probes-amazon-s-pricing-policy-for-traders

    The funniest thing about Amazon’s rule is there prices are often lower on a another Amazon site, so they break there own rules!

    Here is a some examples!

    http://www.huge-river.com/product/B000NDGNCS

    http://www.huge-river.com/product/B000GETVAA

    You can go though this site and find them all day!

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