Amazon Japan will pay around 1,400 suppliers a collective 2 billion yen, or about $18.85 million, for pushing the costs of discounts onto suppliers, the Japan Times reported yesterday. If you’re excited that Amazon had to cough up a couple million, so is Amazon, which arguably got off very easy.
According to the report, the Japan Fair Trade Commission found that, starting in 2016, Amazon Japan had asked suppliers to cover part of Amazon-imposed discounts. Amazon Japan had also reportedly imposed fees for “system usage and marketing costs” without much justification and pocketed “unused savings” which suppliers had been instructed to designate for advertising expenses.
When the JFTC opened the case in 2018, it was investigating the allegations as a potential violation of an antitrust law which prohibits companies from using their power to extract money from dependent companies. The commission stopped short of pursuing an antitrust case, and left it at the aforementioned fine. The Japan Fair Trade Commission has announced that they and Amazon have worked out a commitment plan (a plan to abide by laws) going forward, which Amazon has described to Business Insider as “changes to several of our vendor fees programmes in order to increase transparency for our vendors,” which were the result of “cooperative and productive discussions.”
In the end, vendors will receive a not-insignificant amount of money, and Amazon got off with little more than a parking ticket. Amazon also gets to accurately tell Business Insider this: “there has been no finding of illegal conduct.” You can also tell they don’t give a shit about the bill, otherwise they’d be fighting tooth and nail. Just ask the EU regulators whom Amazon has been battling for years over a 250 euro ($296) million tax bill.
It’s not the first time Amazon Japan has met with regulators for rent-seeking behavior and gotten off with a wrist slap and a joint press release. In 2016, the JFTC raided Amazon’s offices, under the belief that Amazon had pushed retailers to cut their prices in order to compete with other sites. But it dropped the probe the following year with a similar bargain, ending with Amazon’s promise to delete a mandate in its contracts that ordered sellers to keep their prices equal or lower than on competing sites.
But Amazon is under scrutiny around the world. Although it’s unclear whether US law or political will is robust enough to even deal with Amazon, Jeff Bezos did get his first grilling before Congress last month. In it, he admitted that Amazon might in some cases be misusing data from the third party sellers on its site to get an advantage—meaning that Amazon might be luring sellers to its marketplace so that it can reverse-engineer their best-performing products down the line. Incidentally, that’s the same reason EU regulators are looking into the company right now, and they could fine Amazon up to 10% of its annual global revenue, which would be roughly 15,000 times that of the Amazon Japan fee.
Gizmodo has reached out to Amazon and the Japan Fair Trade Commission and will update the post if we hear back.
Update 9/12/2020 1:17pm EST: In a statement, Amazon told Gizmodo that they “committed to having open and constructive discussions with all our vendors to support development of their businesses.” They added that they are “pleased that the JFTC has committed that its guidance will apply equally and fairly to all companies, which will help ensure a level, competitive playing field.”