Amazon might be looking at a tough time over in Germany.

The online retailer has been accused by Germany's antitrust regulator of undermining competition when it has dealt with third-party merchants. Specifically, Amazon has set up regulations that keep sellers in the Amazon Marketplace from selling their products at cheaper prices elsewhere. The German watchdog asked Amazon to change its rules or the country would be forced to impose reform. "The terms of Amazon's Marketplace in effect obstruct competition," said Andreas Mundt, the president of the German cartel office. "We are in talks with Amazon to eliminate these impediments to competition," he said, "If necessary, we will issue a crystal clear decree."

Germany is Amazon's second largest market after the United States, so keeping a good relationship with them is important to the company. Also, Amazon has been criticized over tax payments, and the government has been pressured to crack down on companies like Amazon without waiting for other countries to act.

"Luckily, we have instruments of torture, which we will use if necessary," Mundt said.

[via Reuters]