Europe Commission accuses Amazon of breaching competition rules

The European Commission says it believes that Amazon's behavior is anti-competitive and detrimental to smaller vendors.
Written by Daphne Leprince-Ringuet, Contributor

The European Commission (EC) has said it believes that Amazon is breaching EU competition rules by unfairly using independent sellers' data. The EC is now opening a second investigation into some of the online retail giant's processes.

An antitrust investigation against Amazon was launched one year ago by the EC to probe how the tech giant is granted access to sensitive data from third-party sellers, and whether the process affects competition. 

With Amazon playing the double role of online marketplace and retailer, the EC found that there was a risk of conflict between the e-tailer's best interests and that of the independent vendors Amazon provides a platform for. 

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As a marketplace service provider, the company has access to non-public information about third-party sellers, including which and how many products are shipped, how many visits are paid to vendors' offers, as well as various consumer claims on products such as activated guarantees. 

According to the EC, Amazon aggregates this data and uses the information to make strategic business decisions, such as tailoring retail offers with a focus on best-selling products. This allows it to alter its retail offers and strategic business decisions "to the detriment of the other marketplace sellers", the EC said.

The practice, argued the Commission, allows Amazon to avoid the normal risks of competition and increases the company's dominance in markets where it already has a large footprint, like France and Germany. This could potentially constitute the abuse of a dominant market position, which is prohibited in EU law.

"We must ensure that dual role platforms with market power, such as Amazon, do not distort competition. Data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers," said Margrethe Vestager, the EC's executive vice president. 

"With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers."

The Commission also announced that it is opening a second investigation that will focus specifically on the role that data plays in selecting the vendors that make it to Amazon's "Buy Box" – the feature that allows customers to add items from specific retailers directly into their shopping cart.

Featuring in the Buy Box is one of the main ways to sell on Amazon for third-party vendors. The EC is looking at the possibility that Amazon is offering preferential treatment for the display of its own retail offers, and of those of sellers that use the company's logistics and delivery services. 

"The conditions of competition on the Amazon platform must also be fair," said Vestager. "Its rules should not artificially favor Amazon's own retail offers or advantage the offers of retailers using Amazon's logistics and delivery services."

Vestager is ramping up the EU's efforts to tackle anti-competitive practices in the European bloc, and has led a series of high-profile investigations into the behavior of the biggest tech players. Google, for example, has paid a total of over €8 billion in fines as a result of European sanctions.

Apple's processes are also on the Commission's radar, and an antitrust investigation into the Cupertino giant's rules for developers who distribute their apps via the App Store opened earlier this year

The Commission's new charges against Amazon come just one month after the US judiciary antitrust subcommittee published the outcome of a probe into Amazon, Facebook, Apple and Google, in which it recommended stronger antitrust laws to restore competition in the digital economy. 

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Estimating that Amazon holds about half of US online retail sales, the subcommittee concluded that the company officially refers to third-party sellers as "partners", while in reality treating smaller vendors like "internal competitors".

A spokesperson for Amazon said: "We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts. Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate.

"No company cares more about small businesses or has done more to support them over the past two decades than Amazon. There are more than 150,000 European businesses selling through our stores that generate tens of billions of Euros in revenues annually and have created hundreds of thousands of jobs."

Amazon can now examine the documents in the Commission's investigation file, and if the company wishes to present comments in return, it has the opportunity to request an oral hearing.

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