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German Regulators Investigate Amazon Anti-Gouging Policies

By Rich Duprey – Aug 17, 2020 at 11:52AM

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But a California court just said the e-commerce giant needs to exert more control over its sellers, not less.

Germany's antitrust regulator is launching an investigation into Amazon (AMZN -1.57%) for its effort to stop price-gouging during the pandemic, saying the e-commerce giant "must not be a controller of prices."

It's a curious charge considering that earlier this year, regulators in Italy announced that Amazon and eBay were being investigated for not doing enough to prevent third-party sellers from gouging consumers early on in the crisis. But Germany's action may stem from an agreement Amazon had in place with regulators years earlier regarding pricing policies of third-party sellers. 

Amazon warehouse employee

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Between a rock and a hard place

Reuters reports Germany's Federal Cartel Office is investigating complaints against Amazon that it restricted third-party sellers from charging prices it deemed too high during the pandemic. It noted that Amazon was cooperating and its statements were being evaluated.

In 2013, Amazon forced sellers that were offering products cheaper elsewhere to charge the same price on its marketplace, a restriction that the German cartel office required the retailer to eliminate. And last year, Amazon agreed with the regulators to overhaul its terms of service for third-party sellers in exchange for ending a probe into the retailer.

Yet Amazon is also being told it must exert greater oversight over its third-party sellers after the Fourth District Court of Appeal in California ruled last week that Amazon was legally liable for defective products sold by third parties on its site even though it did not manufacture, distribute, or sell them.

A woman was injured after she bought a replacement battery for her laptop from a Hong Kong-based seller on Amazon. The battery exploded, causing severe burns.

The court said because Amazon accepted the product, stored it in its warehouse, made a site available to list it, and attracted the buyer's interest, it bore responsibility for the harm the battery caused. Amazon is considering appealing the decision.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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