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Amazon to overhaul seller agreement over German anti-competitive concerns

By Sasha Fedorenko July 18, 2019 - 4:08 pm

Amazon have overhauled their seller agreement in response to the verdict in a dominance abuse investigation by German’s cartel office, Bundeskartellamt.

The move will see Amazon changing their Business Solutions Agreement (BSA) for their marketplaces worldwide. The change will come into an effect in 30 days.

In 2018, the German watchdog launched an abuse proceeding against Amazon to determine whether the marketplace’s terms of business and practises towards sellers on their German Amazon marketplace are anticompetitive.

The investigation was triggered by a number of complaints from sellers which point to Amazon imposing unfair demands and policies on their merchants. Criticism includes anti-competitive conduct such as blocking and terminating sellers’ accounts, handling the sellers’ product information for Amazon’s own benefit and more.

“The amendments address the numerous complaints about Amazon that the Bundeskartellamt received from sellers. They concern the unilateral exclusion of liability to Amazon’s benefit, the termination and blocking of sellers’ accounts, the court of jurisdiction in case of a dispute, the handling of product information and many other issues. With our proceedings, we have obtained far-reaching improvements for sellers active on Amazon marketplaces worldwide. The proceedings are now terminated”
– Andreas Mundt, president of the Bundeskartellamt.

Seller agreement amendments

Liability provisions

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 are 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 the 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 (“parity requirement”).

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.

Confidentiality

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.

Transparency

The Bundeskartellamt made it easier in future for sellers to identify applicable rules and regulations in the first place. In the future, there 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.

  • 3 months ago

    About time!!

  • 3 months ago

    a good start

  • Julius Oliveti
    3 months ago

    Its always the Germans who scare Amazon. Remember it was the Germans who investigated Price Parity and Amazon capitulated.

    • ifellow
      3 months ago

      The UK hasn’t really done anything for amazon to be scared of.

      Apart from turn a blind eye to the huge amount of vat fraud. There has been no other action

  • 3 months ago

    comment to ifellow above:
    The UK has hardly any staff employed to deal with such issues.
    Its perhaps odd that Germany is showing scepticism about Europe’s adequacy.
    In the UK much of the DTI was abandoned – whether Boris & chums will do anything other than devise ways to turn the marketplaces into ‘tax-farmers’ must be doubtful

  • Bob
    3 months ago

    When will be allowed to contact customers by phone to assist them with their order? Does this change the restriction of putting marketing materials in shipments?

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