Amazon shuttered in France over COVID-19 emergency costs

Amazon’s six French warehouses, which employ around 10,000 workers on permanent and interim contracts, have been shut since April 16 after court rulings said the company could only continue to operate if it complied with two conditions.

Firstly, as most other retailers are effectively locked down, Amazon would need to limit deliveries to a list of essential goods only—health items, food, pet food, and office electronics, such as laptops. Secondly, following a series of complaints and walkouts, Amazon would need to carry out an assessment of the health risks to its employees in consultation with French labor organizations, including the hardline SUD union and the CFDT, France’s biggest union, and make appropriate changes to ensure social distancing where necessary. The court said it would review Amazon’s progress in meeting these requirements after a month.

Both conditions came with substantial penalties for non-compliance—a €1 million (U.S. $1.09 million) fine per day and per violation.

Amazon was incensed. On April 24, the company appealed the court’s decision but lost. In its defense, the judge saw Amazon had tried to engage and improve safe working conditions and so reduced the potential fine for each infraction to €100,000 (U.S. $109,000).

Highlighting the potential costs of non-compliance, Amazon said in a statement, “our logistics operations are technically complex and the court’s fine of €100,000 [(U.S. $109,000)] for any infraction means that even accidental shipping of non-authorised products, on the order of 0.1 percent of the total, could lead to over €1 billion [(U.S. $1.1 billion)] of fines per week.”

Amazon France’s chief executive, Frédéric Duval, also denounced the court’s order for being too vague. “There is a huge ambiguity,” he told RTL radio. “Is a nail clipper a hygiene product? Is a condom a medical item? I’m not able to define that.”

As a result, instead of playing ball, the company chose to close all its warehouses up to May 13 at least, thereby delaying orders. It also tried—unsuccessfully—to benefit from a state scheme under which the French government would pay 70 percent of the gross salary of the 10,000 workers the company placed on furlough as a result of the closures, which the French labor ministry said were “the consequence of a court ruling and not of a drop in activity.”

Amazon is no stranger to using shutdowns as a political weapon. In 2018, the company blocked shipments to Australia from its overseas stores after a sales tax was imposed on imported goods. But that standoff came to an end when Amazon backed down six months later, reopening overseas shipments in time for the Black Friday sales.

It is unclear whether Amazon has been singled out because of its size, its sketchy employee rights’ records worldwide, or because of its knack for avoiding tax. But in a country where labor laws and unions still have a powerful hand, Amazon’s behavior was always likely to jar with expectations of best practice.

Indeed, the company has come under increased scrutiny—and increased criticism—during the COVID-19 crisis. On March 17, the day of France’s lockdown, several hundred Amazon workers there held a walk-out in protest against the company and its perceived lack of focus on health and safety. Two days later, France Finance Minister Bruno Le Maire said Amazon was putting “unacceptable” pressure on its workers by refusing to pay them if they didn’t go into work. Labor disputes have not, however, just been limited to France: Workers in Spain and Italy have also staged walkouts at Amazon’s warehouses, citing a lack of protection.

The way the company cashes in is also raising alarm bells. Amazon’s European sales have shot up by a surge in demand but—since the company sells few grocery items—both critics and competitors have questioned just how “essential” these products are and whether Amazon is creaming off a market closed to its rivals.

France has had a testy relationship with foreign multinationals in the recent past, particularly tech giants. Last year the government introduced a digital services tax to force the likes of Amazon, Google, Twitter, and Facebook to pay 3 percent of their French revenues in tax following criticism the profits of U.S. companies were being repatriated. The measure was passed last July, and the first set of dues were collected in November, but further payments have been postponed following U.S. intervention in January, which included a promise from President Trump not to impose any new tariffs on French goods in a tit-for-tat trade war.

It is unlikely Amazon’s latest legal spat will result in the company pulling out of the market or any immediate call to limit its power. But the episode raises questions about when the cost of compliance—as well as potential sanctions—mean that it is not worth a company’s while to keep operating.