EU expands antitrust investigation of Amazon
Amazon could face heavy fines in the European Union (EU) for allegedly misusing third-party seller data and unfairly favoring certain sellers.
In a press release, the European Commission, which implements decisions and manages day-to-day operations for the EU, said it has informed Amazon of its preliminary view that it has breached EU antitrust rules by distorting competition in online retail markets. The Commission has also opened a second formal antitrust investigation into the possible preferential treatment of Amazon's own retail offers and those of marketplace sellers that use Amazon's logistics and delivery services.
In March 2019, the Commission fined Google $1.7 billion for what it called “abusive practices” in online advertising. Amazon has publicly warned of “misguided” free market interventions it says will hurt small retailers and their customers, in response to recommendations from the House Judiciary subcommittee on antitrust that Amazon and other tech giants should face more oversight or even be broken up.
According to the Commission, it takes issue with what it says is Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon's own retail business, which directly competes with those third-party sellers. The Commission also says its preliminary findings show that “very large” quantities of non-public seller data are available to employees of Amazon's retail business and flow directly into automated systems which aggregate the data to calibrate Amazon's retail offers and strategic business decisions.
For example, the Commission says this allows Amazon to focus its offers in the best-selling products across product categories and to adjust its offers in view of non-public data of competing sellers.
In addition, the Commission has opened a second antitrust to investigate whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users lead to preferential treatment of Amazon's retail business or of the sellers that use its logistics and delivery services. The “Buy Box” is displayed prominently on Amazon's websites and allows customers to add items from a specific retailer directly into their shopping carts.
According to the Commission, being chosen as the offer featured in the Buy Box is crucial to marketplace sellers, as it prominently shows the offer of one single seller for a chosen product on Amazon's marketplaces and generates the vast majority of all sales. The other aspect of the investigation focusses on the possibility for marketplace sellers to effectively reach Prime users.
If proven, the practice under investigation may breach Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position. The Commission said it has not determined any final outcome of any of its antitrust investigations into Amazon.
“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” said European Commission executive VP Margrethe Vestager, in charge of competition policy. “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. The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favor Amazon's own retail offers or advantage the offers of retailers using Amazon's logistics and delivery services. 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.”
Amazon has not yet formally responded to the European Commission’s announcement.