GER: Competition Law and ‘Affiliate’ Liability

May 12, 2023 Benn-Ibler Rechtsanwälte

The German Federal Supreme Court (Bundesgerichtshof, hereinafter BGH) has addressed the issue of affiliate marketing programmes. The operators of such programmes are not liable for any misleading advertising by an affiliate if the affiliate was acting within the scope of a separate service, meaning their service is not an extension of the programme's business operations.

A mattress manufacturer had filed a lawsuit against businesses of the Amazon group involved in Amazon’s online programme. Amazon operates a so-called affiliate marketing programme. Third parties, called affiliates, are allowed to post links on their own website which refer to products that are sold on amazon.com. When a visitor to the website buys the product via the Amazon link, the affiliate receives a percentage of the purchase price as an agent's commission.

In 2019, an affiliate placed links to products sold on Amazon on their own bedroom product website. The plaintiff, a mattress manufacturer, considered the affiliate’s advertising to be misleading and complained about Amazon violating German competition law, claiming that Amazon was responsible for the anti-competitive behaviour of its affiliate under Section 8(2) of the German Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb, UWG).

The BGH ruled on this as follows:

The intrinsic reason for considering the business activities of the agent (in this case the third party or the affiliate) under Section 8 (2) UWG would lie primarily in an expansion of the business operations benefiting the business owner, in this case Amazon, and a certain degree of control of the risk area by the business owner.

In the opinion of the court, however, such an expansion of business activity is lacking if affiliates design their own products or services such as their own website, e.g. for bedroom articles and mattresses, at their own discretion and use them to earn commissions.

In the case at hand there was also a lack of control over the risk area, a factor necessary for determining liability. With linking a product to Amazon, an affiliate does not act in fulfilment of a specific order by Amazon, but solely in their own interest.

BGH, I ZR 27/22 (26.01.2023)