By KYOTA TANAKA/ Staff Writer
September 11, 2020 at 15:25 JST
A distribution center of the Japanese arm of Amazon.com Inc. in Kawasaki, Kanagawa Prefecture (Kyota Tanaka)
The Japanese arm of Amazon.com Inc. will refund about 2 billion yen ($19 million) in total to 1,400 or so companies for losses they incurred through highly questionable business practices by the e-commerce giant.
The Fair Trade Commission on Sept. 10 accepted a business improvement plan that the company submitted after being questioned about violating the Anti-Monopoly Law.
According to the FTC, Amazon promised to cease five practices, such as asking merchandise suppliers to pay “make up money” and “cooperation money.”
Amazon automatically changes sales prices of items sold on its site according to those set by rival sites. When Amazon is unable to meet its profit target because of price fluctuations, it requires suppliers to make up the balance.
Amazon in 2018 started a cooperative system in the name of investment and asked its suppliers to join and pay up to 10 percent of wholesale costs.
The FTC considered this conduct an abuse of Amazon’s dominant bargaining position.
In its revamped business proposal, Amazon pledged to voluntarily cease these practices, improve compliance and report its performance on these issues to the FTC for the next three years.
The company also promised to reimburse suppliers who felt obliged to accept Amazon’s demands because they rely so heavily on the Seattle-based company.
Total compensation will reach about 2 billion yen.
The FTC’ acceptance of Amazon's business improvement likely means that the company will be spared administrative punishment.
“We will continue to work to have a proper and open conversation with all of our suppliers,” an Amazon representative said Sept. 10.
Naozumi Nishimura, a professor at Japan University of Economics, noted that 2 billion yen was probably not a great loss for Amazon.
"But the (incident) reveals how domestic suppliers have struggled," he said. "I think other major e-commerce companies take their cue from this and correct their practices.”
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