Japan is investigating Amazon for allegedly bullying other companies

Amazon is under investigation by the Japan Fair Trade Commission for allegedly using its market dominance to lower the price of goods sold on its site, while regulators worldwide are scrutinizing potentially anti-competitive practices by big tech companies.

“The JFTC has just initiated its formal investigation,” Takujiro Kono, director of the international affairs department of the Japan Fair Trade Commission, confirmed in an email to the Japan Times.

Amazon Japan and related companies operating in the country are suspected of restricting the activities of sellers on the e-commerce site Amazon.co.jp to pressure them to lower their prices, Kono said. The company is also suspected of pressuring sellers to use Amazon’s fulfillment services.

The case against the company is still in its early stages, Kono added, citing unfair trade practices, abuse of superior bargaining power and trading under restrictive terms as possible legal violations under investigation.

The tactics the retailer is reportedly using include squeezing business partners in exchange for visibility.

Amazon Japan is under investigation by the JFTC for possible abuse of market dominance. | Jiji

Amazon’s Japanese entity has reportedly pressured retailers to lower prices to gain more prominent placement on the e-commerce site, which normally results in better sales due to higher views. The company is also suspected of wanting to withdraw certain products completely if a retailer does not meet demands to lower product prices, local media report.

If proven, these activities could violate Japan’s anti-monopoly laws, which prohibit companies from using their market power in this way.

An on-site investigation was conducted by the regulator on Tuesday, according to a Reuters report.

“Japanese antitrust law prohibits ‘abuse of superior bargaining power’ – the practice whereby a company with a superior bargaining power unilaterally imposes disadvantageous terms on a company with a weaker bargaining power – as a form of ‘bullying,’” said Yasuo Daito, partner at Nozomi Sogo Lawyers.

In a typical case of this kind, a business leader in a superior position forces a business partner in a weaker position to do something that does not benefit the smaller or weaker company, he explained.

From 2009 to 2012, Daito was principal investigator at the JFTC.

Amazon Japan has been accused of forcing companies to lower prices in exchange for better placement on the site. | Bloomberg

Local media reports suggest that the US parent company, Amazon with a market capitalization of $2 trillion, was somehow involved in implementing the practices under investigation. Amazon Japan did not immediately respond to a request for comment.

“The Japan Fair Trade Commission, like competition authorities in other jurisdictions, focuses on the impact of the enormous power of Google, Apple, Facebook and Amazon on competition,” Daito said.

The current investigation can also be seen as a continuation of the JFTC’s ongoing investigation into possible abuses by these companies in recent years, Daito continued.

The regulator has investigated Amazon Japan at least twice before, in 2016 and 2018.

“It will be interesting to see whether such action in such a case would also constitute abuse of a superior position,” Daito said of the latest investigation.

Amazon is being sued in Europe and the US for possible antitrust violations. The US Federal Trade Commission filed charges against Amazon in 2023 for possible anti-competitive practices.

Amazon Japan is trying to expand aggressively in Japan. Recently, the company employed approximately 12,000 employees – and this number is rising.

In 2022, Amazon reported investing more than 1.2 trillion yen ($8 billion) in the Japanese market, up 20% from the previous year, as part of efforts to expand its logistics and data center business in the country to expand.