There was a time when the phrase “cooperation payments” evoked images of burly, muscle-bound goons, walking around town, sometimes armed with a baseball bat but usually relying only on their reputation of being able to extract cold hard cash from local merchants in exchange for “protection”. This morning in Japan, it appears nothing has changed.
According to Japanese press this morning, Amazon Japan is being investigated by the country’s antitrust regulator on allegations of asking vendors for a percentage of their sales revenue.
As the Nikkei reports, the Japanese arm of the U.S. e-commerce giant whose name had already appeared increasingly in discussions of market monopolies and anti-trust violations, began requesting its vendors contribute “cooperation payments” from around 2017, claiming that the contributions would be used for system upgrades and other improvements. The requested payments ranged from a few percent to well over 10% of sales prices. The company is also alleged to have requested vendors help absorb the costs of discounting goods.
Surprisingly, Nikkei adds that Amazon Japan has been struggling with rising shipping and other operational costs.
What is more notable, however, is that in its first direct encounter with the monopoly busters, the Japan Fair Trade Commission conducted an on-site investigation at Amazon Japan’s office on Thursday on suspected violation of the Antitrust law.
The watchdog suspects the company of using its dominant position in the country’s e-commerce market to pressure suppliers, making it virtually impossible to refuse the request.
The regulator intends to clarify the details of the payment procedures, while Amazon Japan said on Thursday that it is “fully cooperating” with the investigation.
In February, Nikkei reported that Amazon Japan was seeking payments from its suppliers to cover the cost of sales system upgrades and other expenses. Amazon is reportedly already using a similar system in the U.S.