EDITORIAL | Go After Amazon for Restrictive Practices Towards Sellers

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What if a mammoth company used its overwhelmingly powerful position to pressure its business partners to lower their prices? If a major global IT company engaged in such conduct, it would present a major problem. Therefore, all eyes are on the major online retailer, Amazon Japan GK.

The Japan Fair Trade Commission (JFTC) recently conducted an on-site inspection of the company on suspicion of violating the Antimonopoly Act.

It was suspected that Amazon forced sellers to lower their prices on its online shopping site. There are also strong suspicions that the company forced retailers to use proxy services provided by Amazon. Those include Amazon's product delivery service.

The scale of online shopping has already reached approximately ¥25 trillion JPY ($164 billion USD). For this market to continue healthy development, however, it is necessary to be able to earn fair profits. That means not only for site operators and users but also for sellers.

The FTC should gather information from a wide variety of sources and use it to clarify the actual situation.

Competition on Amazon 'Marketplace'

Amazon owns and operates an e-commerce platform called "Marketplace." In it, third-party small retailers can sell their products at a fixed price. Only one product is displayed on each product page, in a location that is easily visible to users. "Competitively priced listings" are one of the conditions for obtaining this coveted position, according to Amazon.

For sellers, online shopping sites are an essential sales channel for delivering products to many consumers. Since sales of a product greatly depend on its relative placement on the site, it is difficult for a seller to refuse a request from Amazon to lower the price.

Therefore, the question is whether the company used its strong position as an online shopping site operator to force sellers to lower their prices. If so, that could be considered an abuse of its dominant bargaining position or engagement in restrictive terms of trade. Both of these practices are also prohibited by the Antimonopoly Act.

Allegedly, some sellers who failed to comply with Amazon's demands were removed from prominent locations on Amazon Marketplace.

FTC's Third Time

What cannot be overlooked is that this is the third time that Japan's FTC has conducted an on-site inspection of Amazon. In the past, the company adopted various improvement measures. It also refunded a total of ¥2 billion ($13 million) to about 1,400 companies. At that time, it was found to have sold products at discounts and had suppliers cover part of those markdowns. The situation where a company's habitual actions are suspected to violate laws and regulations cannot be overlooked.

*Japan Fair Trade Commission on April 22, Chiyoda-ku, Tokyo (©Kyodo)*

The Japan FTC also plans to investigate the possibility that the US-based company Amazon.com may have played a part in the alleged abuses. Amazon's business practices are already an issue in the United States and Europe.

In this regard, Japan's FTC should cooperate with overseas authorities. Together, they must ensure a healthy development of the online shopping market.

Author: Editorial Board, The Sankei Shimbun

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