Japan Fair Trade Commission Probes Amazon Japan; Treatment Of 3rd-Party Sellers Thought To Violate Law

The Yomiuri Shimbun

17:50 JST, November 26, 2024

The Japan Fair Trade Commission conducted an on-the-spot inspection of Amazon Japan, a Japanese unit of the major online shopping service company, on Tuesday on suspicion of violation of the Antimonopoly Law.

The JFTC suspects that the Meguro Ward, Tokyo-based company had forced third-party merchants on its online sales site to lower the retail prices of their goods. The JFTC alleged that such demands constitute unfair trading practices prohibited by the law.

It was the third time that the JFTC conducted on-the-spot inspections of the company since 2016. The JFTC also aims to investigate the company’s U.S. parent, Amazon.com. Inc., by demanding the submission of reports.

In recent years, the JFTC has strengthened regulations on the big tech firms collectively known as GAFA and has conducted inspections on one of them after another, including Apple Inc. and Google LLC of the United States.

In April, the JFTC imposed an administrative penalty on the U.S. parent of Google for the first time.

According to sources familiar with the matter, Amazon Japan demanded that its third-party merchants should set lower retail prices than those seen on rival online shopping platforms when they sell goods via its Marketplace site.

In addition, the JFTC suspects that Amazon pressured the third-party sellers to use distribution services operated by the Amazon — for which the sellers must pay — when they package merchandise, send it to purchasers and collect customers’ payments.

The third-party sellers are companies and individual business operators across the nation.

It seems that Amazon Japan officials monitor prices on online sales sites of other major IT firms and large-scale merchandise retailers of home electronics by frequently accessing the rival sites.

If a third-party merchant refused such demands, Amazon Japan removed that merchant’s goods from the company’s list of recommended products.

Because removal from the list reduces a seller’s opportunity to be accessed and thus drastically reduces its sales volume, third-party sellers had no other choice but to accept the demands.

It is possible that such deeds by Amazon Japan have continued since at least several years ago.

It seems that the JFTC judged such deeds by Amazon Japan to constitute abuse of its dominant position and the imposition of trading deals with restrictive terms, which the Antimonopoly Law prohibits.

Several times in the past, the JFTC investigated Amazon Japan on suspicion that the company imposed unlawful pressure on third-party sellers on its online sales site and on firms providing products for the company’s direct sales.

Each investigation was followed by Amazon Japan improving the conditions of its trading deals.

In 2016, the JFTC conducted an on-the-spot inspection of Amazon Japan on suspicion that it imposed pressure on third-party retailers on its online sales site so that the retailers would have to make their product lineups and pricing equal to or more favorable than those on rival companies’ sites.

At the time, Amazon Japan deleted a contract clause which demanded third-party retailers provide preferential treatment and thus the JFTC ended the investigation in 2017, saying that the company had voluntarily discontinued the unlawful deeds on its own will.

Later, another suspicion surfaced that Amazon Japan had inappropriately collected “cooperation fees,” which amounted up to 10% of trading prices, from companies that provided products to Amazon Japan.

In 2020, an administrative penalty called “commitment procedure” was imposed on Amazon Japan. As a result, Amazon Japan paid about ¥2 billion to about 1,400 business operators who suffered detriments due to the company’s problematic deeds.