15 ms·

German cartel office investigates Amazon’s treatment of small sellers

104 points by howard941 8y ago

yohann305 8y ago
Could someone explain how is this different than a supermarket selling their own products, for example Walmart selling Colgate toothpaste and their own ‘equate’ brand?
- cenal 8y ago
  No supermarket has had the scale and market share as Amazon. That makes their business practices fall under increased scrutiny.
  - twblalock 8y ago
    Focusing on scale simply punishes success. It is better to focus on anti-competitive practices than to just look at scale and assume that big is bad. Otherwise the government is telling businesses that they should succeed up to a certain point, but should intentionally fail or handicap themselves after they reach that point in order to avoid being punished.
    - CPLX 8y ago
      Quantity has a quality all its own, as they say.
    - anoncake 8y ago
      Did the heading change? Right now it says "German cartel office investigates Amazon's treatment of small sellers", not "German cartel office investigates Amazon's size".
      - twblalock 8y ago
        I was responding to a parent comment that said Amazon's scale should make be treated differently than other companies.
        anoncake 8y ago
        Other companies aren't allowed to abuse their markt-dominant position either. Small companies just generally don't have one.
    - TeMPOraL 8y ago
      > Otherwise the government is telling businesses that they should succeed up to a certain point That's the ultimate point, though. The reason why anti-competitive laws exist. The reason we like free markets on a societal level is that competition - where it happens - keeps the prices down, and prevents a single entity from having too much control over people (via prices and availability). We benefit from entrepreneurs playing the game, not winning the game. A total success on the market is a disaster for society (imagine e.g. Walmart being the only grocery store, or fully vertically integrated Unilever controlling food production).
- cavanasm 8y ago
  A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). On Amazon, companies are selling to consumers and Amazon facilitates that process. If Amazon makes it harder for sellers of particular products that Amazon also sells, they can effectively force those sellers out of business. That being said, I'd be kind of surprised if Amazon really needed to sell at a loss for products Amazon is selling directly since Amazon has a massive advantage in scale.
  - rlpb 8y ago
    > A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). Do supermarket supplier contracts really work like this? I was under the impression that nowadays suppliers have to pay supermarkets for shelf space, take the risk themselves for low sales volumes (with agreements to buy back inventory), etc.
    - cavanasm 8y ago
      It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.
    - sct202 8y ago
      Some things are based on scan based trade (consignment), but most products aren't sold like that at this time. It's hard to get vendors to agree to the terms unless they're given control over in-store execution, and it's a lot of set up/hassle to integrate systems. The products that scan based trade tends to be most common with are DSD where someone from that company stops by on a fairly regular basis to deliver or merchandise the product.
chrisseaton 8y ago
Who are they saying Amazon is in a cartel with?
- Sylos 8y ago
  The German cartel office also investigates general abuse of dominant market positions, including monopolies (where one could say that the market doesn't exist anymore). This double-role of the cartel office makes sense, because the whole point of a cartel is for a group of companies to be able to interact with the market like when they would hold a dominant market position. There's also the step in between, which are official fusions or buyouts of big companies, which's only difference compared to a cartel is that they're officially talking to one another, not inofficially, but which would lead to one single company holding the dominant market position, at which point you would normally not count that to "cartels" at all anymore.
- rbehrends 8y ago
  The headline uses a too literal translation of the German word "Kartellbehörde" [1], which can (literally) mean cartel office, but in this case refers to the federal competition regulator (the "Bundeskartellamt" [2], which has this name for historical reasons). [1] https://www.linguee.de/deutsch-englisch/uebersetzung/Kartellbeh%C3%B6rde.html https://www.linguee.de/deutsch-englisch/uebersetzung/Kartell... [2] https://en.wikipedia.org/wiki/Federal_Cartel_Office https://en.wikipedia.org/wiki/Federal_Cartel_Office
zavi 8y ago
Can't make your own tech sector? Steal from the FAANG!
Sylos 8y ago
They should also investigate Amazon's treatment of their suppliers. I've worked in two supplier companies that would have preferred to not sell to Amazon, but essentially had no other choice. In both of them, when sending something off to Amazon, we first of all got to rip off the bulk packaging, then individually packed each item in their oh-so-eco-friendly packaging (which I suppose still makes sense as they're individually sending those items out to customers), but then if it arrived at Amazon's warehouse and anything is wrong with that truck load, like a splinter from the pallet damaging one or two packages, then they would usually pack everything back onto the truck and send it back to us. Then we got to rip off their eco-friendly packaging to check each item, pack it again and send it off to Amazon again. The costs for sending the whole truck load back and forth, we as supplier got to pay. To try to avoid this, we also specifically threw away pallets that would have even the slightest chance of splintering, or used them for other companies that we supplied to. So, in effect we got to put the Amazon deliveries in their eco-friendly packaging onto the shiniest dead trees that you'll ever see.
jimnotgym 8y ago
I have been saying for some time that Amazon can't be allowed to operate the marketplace and be a vendor. They could have protected themselves with a 'Chinese Wall' between the departments, but chose to abuse the position. Tip, if you are selling something through Amazon, make sure it is branded. At least you may get Trademark protection.
point78 8y ago
US needs to follow with a class action

104 points by howard941 8y ago

Could someone explain how is this different than a supermarket selling their own products, for example Walmart selling Colgate toothpaste and their own ‘equate’ brand?

cenal 8y ago
No supermarket has had the scale and market share as Amazon. That makes their business practices fall under increased scrutiny.
- twblalock 8y ago
  Focusing on scale simply punishes success. It is better to focus on anti-competitive practices than to just look at scale and assume that big is bad. Otherwise the government is telling businesses that they should succeed up to a certain point, but should intentionally fail or handicap themselves after they reach that point in order to avoid being punished.
  - CPLX 8y ago
    Quantity has a quality all its own, as they say.
  - anoncake 8y ago
    Did the heading change? Right now it says "German cartel office investigates Amazon's treatment of small sellers", not "German cartel office investigates Amazon's size".
    - twblalock 8y ago
      I was responding to a parent comment that said Amazon's scale should make be treated differently than other companies.
      - anoncake 8y ago
        Other companies aren't allowed to abuse their markt-dominant position either. Small companies just generally don't have one.
  - TeMPOraL 8y ago
    > Otherwise the government is telling businesses that they should succeed up to a certain point That's the ultimate point, though. The reason why anti-competitive laws exist. The reason we like free markets on a societal level is that competition - where it happens - keeps the prices down, and prevents a single entity from having too much control over people (via prices and availability). We benefit from entrepreneurs playing the game, not winning the game. A total success on the market is a disaster for society (imagine e.g. Walmart being the only grocery store, or fully vertically integrated Unilever controlling food production).
cavanasm 8y ago
A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). On Amazon, companies are selling to consumers and Amazon facilitates that process. If Amazon makes it harder for sellers of particular products that Amazon also sells, they can effectively force those sellers out of business. That being said, I'd be kind of surprised if Amazon really needed to sell at a loss for products Amazon is selling directly since Amazon has a massive advantage in scale.
- rlpb 8y ago
  > A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf). Do supermarket supplier contracts really work like this? I was under the impression that nowadays suppliers have to pay supermarkets for shelf space, take the risk themselves for low sales volumes (with agreements to buy back inventory), etc.
  - cavanasm 8y ago
    It's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.
  - sct202 8y ago
    Some things are based on scan based trade (consignment), but most products aren't sold like that at this time. It's hard to get vendors to agree to the terms unless they're given control over in-store execution, and it's a lot of set up/hassle to integrate systems. The products that scan based trade tends to be most common with are DSD where someone from that company stops by on a fairly regular basis to deliver or merchandise the product.

chrisseaton 8y ago

Who are they saying Amazon is in a cartel with?

Sylos 8y ago
The German cartel office also investigates general abuse of dominant market positions, including monopolies (where one could say that the market doesn't exist anymore). This double-role of the cartel office makes sense, because the whole point of a cartel is for a group of companies to be able to interact with the market like when they would hold a dominant market position. There's also the step in between, which are official fusions or buyouts of big companies, which's only difference compared to a cartel is that they're officially talking to one another, not inofficially, but which would lead to one single company holding the dominant market position, at which point you would normally not count that to "cartels" at all anymore.
rbehrends 8y ago
The headline uses a too literal translation of the German word "Kartellbehörde" [1], which can (literally) mean cartel office, but in this case refers to the federal competition regulator (the "Bundeskartellamt" [2], which has this name for historical reasons). [1] https://www.linguee.de/deutsch-englisch/uebersetzung/Kartellbeh%C3%B6rde.html https://www.linguee.de/deutsch-englisch/uebersetzung/Kartell... [2] https://en.wikipedia.org/wiki/Federal_Cartel_Office https://en.wikipedia.org/wiki/Federal_Cartel_Office

zavi 8y ago

Can't make your own tech sector? Steal from the FAANG!

Sylos 8y ago

They should also investigate Amazon's treatment of their suppliers. I've worked in two supplier companies that would have preferred to not sell to Amazon, but essentially had no other choice. In both of them, when sending something off to Amazon, we first of all got to rip off the bulk packaging, then individually packed each item in their oh-so-eco-friendly packaging (which I suppose still makes sense as they're individually sending those items out to customers), but then if it arrived at Amazon's warehouse and anything is wrong with that truck load, like a splinter from the pallet damaging one or two packages, then they would usually pack everything back onto the truck and send it back to us. Then we got to rip off their eco-friendly packaging to check each item, pack it again and send it off to Amazon again. The costs for sending the whole truck load back and forth, we as supplier got to pay. To try to avoid this, we also specifically threw away pallets that would have even the slightest chance of splintering, or used them for other companies that we supplied to. So, in effect we got to put the Amazon deliveries in their eco-friendly packaging onto the shiniest dead trees that you'll ever see.

jimnotgym 8y ago

I have been saying for some time that Amazon can't be allowed to operate the marketplace and be a vendor. They could have protected themselves with a 'Chinese Wall' between the departments, but chose to abuse the position. Tip, if you are selling something through Amazon, make sure it is branded. At least you may get Trademark protection.

point78 8y ago

US needs to follow with a class action