Competition authority files another lawsuit against Amazon – What impact could this have on platform liability?

The Competition Center is once again filing a lawsuit against Amazon at the Frankfurt am Main Regional Court. Does this mean that this time there may finally be a long-awaited definitive answer regarding the scope of responsibility of online trading platforms?

I. Background 

The Competition Center already took legal action against Amazon at the end of 2023. The ruling of the Higher Regional Court of Frankfurt am Main on December 21, 2023 (Ref.: 6 U 154/22) meant that online marketplace operators such as Amazon, upon notification of a violation of market conduct rules, must check other offers for similar violations and, if a violation is identified, remedy it if necessary. It was not without reason that the proceedings were described as a landmark case for the Competition Center. 

The Competition Center had used the well-known notice and take down procedure to alert Amazon to a number of offers that violated EU designation protection. The offers contained vegan milk substitutes that were labeled in an impermissible manner, namely as "soy milk," "oat milk," and "rice milk." Amazon then followed up on the reports and removed the offers in question.

However, due to Amazon's refusal to issue a cease-and-desist declaration, the Competition Center filed a lawsuit. The Frankfurt Higher Regional Court prohibited Amazon from allowing third parties to use designations such as "soy milk, rice milk, and oat milk." As a result of the ruling, Amazon now has an extended duty to review. The court made it clear that Amazon must not only remove reported content, but also proactively prevent similar violations. 

Despite the appeal being admitted to the Federal Court of Justice, no supreme court decision was made on the matter. This was due to the fact that Amazon changed its corporate structure before the appeal proceedings were concluded, thereby bringing the proceedings to an end. 

II. New lawsuit, new luck?

Now, the Competition Center has announced that it is filing another lawsuit against Amazon. The Competition Center is thus resuming its long-standing goal of achieving a landmark ruling that bindingly defines the scope of liability of platforms in cases where third parties violate competition law.

The lawsuit was again triggered by anti-competitive offers on the Amazon Marketplace. Third parties offered products on the Amazon Marketplace that were labeled with misleading information, such as outdated energy efficiency classes. Once again, the Competition Center used the tried-and-tested notice and take-down procedure to alert Amazon to the anti-competitive offers. And once again, Amazon initially complied with the notices by removing the reported offers. However, it did not take long before similar violations were found on Amazon Marketplace again.

The Competition Center responded by filing a lawsuit.

III. What does the Competition Center want to achieve? 

Although the "notice and take down" procedure seems to work in principle, it cannot be said that Amazon does not remove reported content. However, how effective is this when similar or very similar violations can be found on the same platform again shortly afterwards? From the perspective of the Competition Center, this is definitely not sufficient, which is why it aims to create the so-called "Notice and Stay Down" procedure from the Notice and Take Down procedure.

IV. What would the "Notice and Stay Down" procedure mean for platform operators?

If the Stay Down procedure is approved by the courts, operators of online platforms, especially online marketplaces, can expect a significant increase in their monitoring obligations. Specifically, this could include the following obligations:

• Implementation of automated filter mechanisms to identify similar legal violations 
• Further development and strengthening of internal compliance structures
• Continuous monitoring of offer data even after a reported violation has been removed

V. But why could this be particularly beneficial for European retailers? 

The Competition Center argues in favor of introducing the notice and stay down procedure, in particular, on the grounds that otherwise unequal competition would arise because European retailers would have to comply with strict European requirements, while retailers from third countries would continue to benefit from the use of inaccurate or misleading information within the meaning of competition law.

In this respect, consistent application of the notice and stay down procedure could ensure that European traders and third-country providers have to meet the same requirements, as otherwise they would have to fear the platforms' automatic filter systems, which would consistently remove their offers.

VI. Outlook 

If the Competition Center succeeds in obtaining a landmark ruling, this could mean a radical change for e-commerce. At the same time, it could ensure a level playing field among retailers, regardless of where they are based. Ultimately, it comes down to the question of how much responsibility platform operators have and what obligations arise from their responsibility. Perhaps the Federal Court of Justice will succeed in ruling on the matter this time.