German antitrust probe into Amazon pricing policy (Update)

Feb 20, 2013 by Frank Jordans
In this Dec. 11, 2012 file photo an employee of Amazon works at the company's logistic center in Pforzheim, Germany. Online retailer Amazon reacted to mounting criticism Monday, Feb. 18, 2013, by firing a security company named in a German television documentary about alleged mistreatment of foreign temporary workers. An Amazon spokeswoman in Germany said the company had ended its relationship with Hensel European Security Services "with immediate effect." (AP Photo/dpa, Jan-Philipp Strobel)

Online retailer Amazon may have broken antitrust laws in Germany by banning third-party traders from selling their products cheaper elsewhere, officials said Wednesday.

German antitrust authorities said they have begun questioning 2,400 traders who signed up to Amazon's Marketplace platform, where they can sell products directly to the web giant's millions of users. In return they must abide by its policies.

The probe comes days after Amazon faced criticism in Germany over the alleged mistreatment of temporary workers and in the wake of accusations in the U.K. that it's been avoiding paying tax.

The head of Germany's Federal Antitrust Office said Wednesday there was "considerable" evidence that Amazon's conditions on third-party traders breached cartel rules by unduly hindering its competitors.

"Amazon's price parity clause ... takes away the traders' freedom to offer their products at lower prices elsewhere on the Internet," Andreas Mundt said in a statement.

If the online retailer is found in breach of antitrust rules it could be forced to drop the offending clause, authorities said.

At least one German online retailer welcomed the probe. Ryan Hood, who runs retail site hood.de, claims his business has suffered because Amazon's policy effectively guarantees consumers won't be able to buy certain products cheaper anywhere else on the web.

Hood has filed a legal complaint against Amazon and said he had already held talks with antitrust authorities in October.

Amazon representatives in Germany didn't immediately respond to phone calls and emails requesting comment.

The Seattle-based company has recently been dealing with the fallout from a German television documentary which alleged that some of its temporary workers in the country faced intimidation by security guards, random searches and constant pressure to increase their performance.

Amazon reacted by pledging to investigate the alleged abuse. Earlier this week, the company fired a security subcontractor and a temporary staffing agency implicated in the documentary, which was aired on public television channel ARD.

Last year, Amazon was criticized in Britain for paying 1.8 million pounds ($2.9 million) in tax in 2011 despite sales 207 million pounds. The practice, common among multinational companies, of funneling money through offshore subsidiaries, led the British government to announce a crackdown on legal tax avoidance schemes.

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