Amazon Marketplace ends price parity

by Gabriele Accardo

On 26 November 2013, Germany’s Federal Cartel Office (“FCO”) issued a press release stating that it has closed the investigation into Amazon’s “price parity” clauses applied in agreements with traders that operated on its Marketplace platform. In fact, on 27 and 29 August 2013, Amazon had already informed the FCO as well as the UK’s Office of Fair Trading (“OFT”) that it intended to no longer enforce price parity on its Marketplace platform. Price parity clauses essentially prohibited Amazon’s sellers from selling products offered on Amazon Marketplace cheaper on any other online channel.

Amazon has now fulfilled these requirements and the sellers on Amazon Marketplace have already confirmed this to the FCO.

In October 2012, the OFT launched a formal investigation into whether the price parity requirement contravenes Chapter I of the Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union. In particular, the OFT was concerned that such policy may raise online platform fees, curtail the entry of potential entrants, and directly affect the prices which sellers set on platforms (including their own websites), resulting in higher prices to consumers. On February 2013, Germany’s Federal Cartel Office had launched a survey to examine the effects of the price parity clause used by for its Marketplace sellers (see Newsletter No. 1/2013 for additional background).

In its press release the OFT specified that Amazon will: (i) discontinue enforcement of contractual price parity obligations for all European Union Marketplace sellers; (ii) remove the Marketplace price parity policy clauses from all current versions of Amazon’s click-through agreements across the European Union; and (iii) notify all other current European Union Marketplace sellers on individually negotiated agreements that it has ceased enforcement of the price parity obligations with the intention of removing them from future agreements. The OFT recommended that other companies operating similar policies review them carefully. In light of Amazon’s decision, the OFT has closed its investigation on grounds of administrative priority.

The two authorities, the FCO and the OFT, closely co-operated during their parallel investigations, and have ultimately ensured the abandonment of the price parity clauses EU-wide by Amazon. Yet, it appears that Amazon’s Marketplace price parity policy remains in place elsewhere, such as in the USA.