Amazon.com, Inc. (AMZN) got hit with new regulatory headaches in Germany on Thursday, right as investors were gearing up for its quarterly earnings report.

Germany's competition watchdog, the Bundeskartellamt, ordered Amazon to stop using automated price policing to control what third-party sellers charge on its German marketplace. The timing? Not great for Amazon, which was set to report fourth-quarter results after the bell.

The Earnings Backdrop

Wall Street analysts were expecting earnings of $1.97 per share on revenue of $211.30 billion for the quarter. UBS maintained its Buy rating on February 3 and nudged its price target from $310 to $311, so sentiment heading into the print was pretty solid.

What Germany's Regulators Found

The authority's beef centers on pricing tools Amazon uses in its German marketplace. Here's the setup: Amazon operates two businesses simultaneously—it sells products directly through Amazon Retail, and it also hosts third-party merchants. Those third-party sellers actually represent about 60% of the units sold on amazon.de, according to the regulator.

The problem, according to the Bundeskartellamt, is that Amazon's automated checks flag certain offers as overpriced, then either remove those listings entirely or limit their visibility in the Buy Box—that coveted spot where customers click to purchase. Reduced visibility can tank a seller's sales pretty quickly.

Andreas Mundt, president of the agency, pointed out the inherent conflict: Amazon competes directly with the very sellers it hosts.

"Amazon directly competes with the other Marketplace sellers on its platform. Therefore, influencing its competitors' pricing, including through price caps, is only permissible in the most exceptional cases, such as in the event of excessive pricing," Mundt said.

The agency also criticized Amazon's lack of transparency. Sellers couldn't reliably predict when their offers would get limited or yanked, because the rules around price caps weren't clear.

The regulator made a point of saying it's not against Amazon offering low prices to consumers. "We are not taking action against Amazon's goal of offering end consumers the lowest prices possible. However, price control mechanisms are not necessary to achieve this goal."

Amazon has one month to appeal the decision to the Federal Court of Justice. The Bundeskartellamt said it coordinated with the European Commission on Digital Markets Act enforcement while building its case.

Stock Movement: AMZN shares were trading down 4.19% to $223.26 on Thursday.