The offices of Amazon.com Inc. (NASDAQ:AMZN) were raided recently by Japanese antitrust regulators on suspicion of antitrust activity. Amazon Japan had allegedly gained an advantage over rival e-commerce sites by forcing retailers to set their prices lower on Amazon. Japan’s antimonopoly act contains provisions that prohibit companies from unreasonably restraining the trade of other companies with which it has a business relationship.
A spokesman for Japan’s Fair Trade Commission confirmed the report on Monday. The FTC could choose to just issue a warning or Amazon Japan could be served with a cease-and-desist order issued by the antitrust regulator. Amazon could accept the order and change its operations to ensure fair competition or appeal to the courts. Rival businesses could also sue Amazon for compensatory damages.
This is just the latest probe targeting the U.S. e-commerce giant. Amazon’s business practices have also come under scrutiny in Europe. Last year, European Union regulators investigated Amazon’s electronic-books business over similar issues. Amazon was accused of using its market power to make publishers accept terms that harmed e-book buyers. At the time, a statement was released by the company saying that its agreements with publishers were believed to be legal, as well as in the best interests of the purchasers.
Amazon Japan was established in 1998. Since its launch, it has become one of the largest e-commerce companies in Japan. In 2015, Amazon’s Japan business earned roughly $8.3 billion in sales, accounting for about 7.7 percent of Amazon’s global net sales of $107 billion. In Japan, Amazon had around 33 million smartphone users using its e-commerce services as of May, according to Nielsen Mobile NetView.
Amazon is well known for its customer-centric approach, and price competition is a large part of that strategy. Amazon shoppers know that they can have items delivered swiftly and get strong customer support if they are unhappy with the purchase. Amazon Prime video service was introduced to Japan last year. Kindle Unlimited, Amazon’s popular e-book subscription plan, was launched in Japan last week.