Amazon Forced To Pay Suppliers $24M In Rebates After Ripping Off Suppliers
Amazon has been forced to repay suppliers $24M after they forced them to fund an online discount program aimed at boosting sales and when the goods failed to sell pocketed the money.
The payout follows an investigation by the Japan Fair Trade Commission in late August. The commission investigated the online retailer on suspicion of violating the antitrust law.
Under Japanese law companies are prohibited from abusing their superior positions to illicitly earn profits from other parties by making demands for rebate payments including for money.
With the reform plan approved by the commission, Amazon Japan has been exempted from further penalties after agreeing to refund the money to suppliers and there will be no decision on whether it has violated the antitrust law.
The suppliers are thought to have complied with Amazon’s demand to cover discount costs as they wanted to continue to sell their products via the Amazon sales network.
According to the commission, Amazon Japan forced suppliers in 10 industries, including electronic goods and pet items, to shoulder the cost to cover discounts the online retailer applied on products.
The same practise is happening in Australia across Amazon and mass retailers who demand supplier rebates when running a promotion.
In some cases, Amazon Japan took the money and then returned inventories when the products did not sell without rebating the suppliers, according to the commission.