|Wed Feb 20 2013 23:41:22|
Is Amazon's Price Parity Clause Anti Competitive?
By: Ina Steiner
Many an online seller has lamented over Amazon.com's price parity clause which prohibits them from offering items they list on Amazon at a lower price anyplace else. Now the German government is investigating that policy to see if it is anti-competitive.
Amazon.com's Fees and Pricing page says sellers may list items at any price they feel is fair, regardless of the Amazon.com price or list price, within the limits set by Amazon, so long as the price adheres to its General Pricing rule, which states:
By our General Pricing rule, you must always ensure that the item price and total price of an item you list on Amazon.com are at or below the item price and total price at which you offer and/or sell the item via any other online sales channel.
GigaOm wrote about the German Bundeskartellamt's investigation, which had been picked up by German news outlets. Bundeskartellamt is an independent competition authority whose job is to protect competition in Germany - which sounds similar to the role of FTC in the U.S.
According to the Bundeskartellamt press release, issued today, it launched a web survey of 2,400 sellers who offer their products through Amazon Marketplace to examine the effects of the price parity clause used by Amazon.de for its Marketplace sellers. "The price parity clause prohibits them from selling products they offer on Amazon Marketplace cheaper on any other internet sales channel," it states. "The prohibition applies to other internet platforms, such as e.g. Ebay or Rakuten, as well as online shops owned by the sellers."
The press release also states, "In order to become active on an internet marketplace, sellers must pay the operators of the marketplace (Amazon, Ebay, Rakuten) various fees, e.g. a specific percentage of the sales prices they achieve. As the sellers cannot allow any favourable conditions to translate into a more favourable price payable by end consumers, it can be difficult for other internet marketplaces that compete with Amazon, especially new platforms entering the market, to reach a large number of customers. There is the threat of Amazon enforcing high seller fees which could result in a generally higher price level without producing sufficient benefits, to the detriment of consumers."
The Bundeskartellamt said Amazon could be required to delete the price parity clause from its terms and conditions if its investigations confirm the suspicion. Amazon would not comment on this development.
What do you think of Amazon's rule that you can't offer an item for a lower price than what you sell it for on Amazon? And does this policy suppress competition, or does Amazon have the right to set the rules on its marketplace?