On Apr. 23, GE Courts confirmed Amazon importance for competition.
GE Courts confirmed Amazon's paramount cross-market importance for competition.
Background
For the first time, Cartel Senate decided in the first and last instance on a complaint against a finding pursuant to Law against competition restraints (GWB), S.19a(1).
S. 19a GWB, in force Jan. 19, 2021, serves to modernize and strengthen supervision of abuse under competition law, via two-stage process; first, Federal Cartel Office can determine company's outstanding cross-market importance for competition (S.19a(1)).
Second step, prohibit the company concerned from certain behaviors (section 19a(2)).
Facts
Amazon operates worldwide, among other things, in e-commerce, as a stationary retailer and as a provider of cloud-based IT services (Amazon Web Services - AWS).
Fifth most valuable company in the world as at Dec. 27, 2021, with a market capitalization of $1.721trn, market value increased by c. 443% over past 7 years.
AWS achieved global sales of around USD 469.8bn in the 2021 financial year.
Of this, Germany accounted for around USD 37.3bn; in terms of sales, Germany was the second most important (sales) market for Amazon after the USA.
Global annual profits rose 1013%, from USD 3bn in 2017 to USD 33.4 bn in 2021; with 1.6mn employees as at Dec. 31, 2021, Amazon is one the world's largest employers.
Federal Cartel Office Decision
In its decision of Jul. 5, 2022, the Federal Cartel Office determined in accordance with S.19a(1) GWB that Amazon.com, Inc., including its affiliated companies, is of outstanding cross-market importance for competition; determination is limited to five years after the entry into force. Amazon.com, Inc.; a German group company then filed an appeal against this decision with the request that the decision be revoked.
During the complaint process, Amazon was appointed by EU CMSN as a gatekeeper under Article 3 of the Digital Markets Act (DMA); for the Amazon Marketplace and Amazon Advertising brokerage platforms operated by Amazon, the DMA regulations regulating market behavior have been in effect in the EU since Mar. 7, 2024.
Federal Court of Justice Decision
German company's complaint was unsuccessful; Federal Court of Justice found no constitutional concerns; since the declaratory order does not relate to a specific information society service, does not violate prohibition on restricting free movement of information society services between member States, per e-commerce directive.
S. 19a Paragraph 1 GWB also did not have to be notified to the EU CMSN in accordance with Information Society services directive 2015/1535 because it is not a general regulation regarding information society services within the meaning of this directive.
Thus, no reason to submit a request for a preliminary ruling to EU Court of Justice.
Per S. 19a(1) GWB, Federal Cartel Office rightly determined that Amazon operates to a significant extent on multi-sided markets in accordance with Section 18, Paragraph 3a GWB and that the group has an outstanding cross-market importance for competition.
Determination of the outstanding cross-market importance for competition does not require any specific threat to competition, or impairment of competition.
Rather, existence of strategic and competitive possibilities is sufficient; S. 19a(1) GWB is intended to enable the Federal Cartel Office to more effectively control large digital companies whose resources, strategic positioning allow them to have strong influence on 3rd-party business activities, to distort the competitive process to own advantage.
And to expand their existing market power into ever new markets to transfer sectors.
Federal Cartel Office correctly determined Amazon has such strategic, competitive potential; it operates in a variety of different, vertically integrated and interconnected markets in a diverse and conglomerate manner, and has a dominant position in the German market for online marketplace services for commercial traders.
Amazon has outstanding financial strength and outstanding access to competitive data such as customer and user data, data from the operation of trading platforms and advertising platforms and related services, as well as from the operation of AWS.
As the operator of numerous national online marketplaces worldwide and in Germany, Amazon holds a key position for retailers' access to their sales markets.
It can exert considerable influence on the sales activities of third-party retailers.
Current validity of DMA regulations, promises made by Amazon during the complaint process to the EU CMSN as part of an abuse procedure do not conflict with the finding.
Regulators
GE Courts
Entity Types
Corp
Reference
LR KVB 56/22 - Amazon, PR 097/2024, 4/23/2024; DSA Dir 2000/31; Dir 2015/1535; DMA Reg 2022/1925
