EU accuses Amazon of abusing its dominant position in online retail

The European Commission has issued a statement of objections to Amazon, alleging that the e-commerce giant has breached EU antitrust rules by using non-public data from third-party sellers to compete unfairly with them. The Commission also opened a second investigation into Amazon’s possible preferential treatment of its own retail offers and those of marketplace sellers that use its logistics and delivery services.

According to the Commission, Amazon has access to a large amount of data from the more than one million third-party sellers that use its marketplace platform in Europe. This data includes information on the number of orders, revenues, shipments, customers, and past performance of the products offered by the sellers.

EU accuses Amazon of abusing its dominant position in online retail
EU accuses Amazon of abusing its dominant position in online retail

The Commission claims that Amazon uses this data to calibrate its own retail offers and strategic business decisions, such as selecting the best-selling products, adjusting prices, managing inventories, choosing suppliers, and launching new products. This gives Amazon an unfair advantage over the third-party sellers, who are its direct competitors in the same market.

The Commission also alleges that Amazon’s dual role as a marketplace and a retailer creates a conflict of interest, as it allows Amazon to benefit from the success of the sellers and then use their data to compete with them. This may reduce the incentives and opportunities for the sellers to innovate and invest in the marketplace, and ultimately harm consumers by limiting their choice and increasing prices.

The Commission’s preliminary view is that Amazon’s conduct amounts to an abuse of its dominant position in the market for online marketplace platforms in France and Germany, which are the largest markets for Amazon in the EU. The Commission considers that Amazon has a dominant position in these markets because of its high market shares, the size and reach of its platform, the significant network effects, the lock-in of consumers and sellers, and the barriers to entry and expansion for competitors.

What are the consequences for Amazon?

The statement of objections is a formal step in the Commission’s investigation, in which it informs the parties concerned of the charges against them and allows them to exercise their right of defence. Amazon will have the opportunity to examine the Commission’s case file, reply in writing, request an oral hearing, and propose commitments to address the Commission’s concerns.

If the Commission concludes that Amazon has indeed infringed the EU antitrust rules, it can impose a fine of up to 10% of Amazon’s annual worldwide turnover and order it to stop its illegal practices and restore effective competition. The Commission can also accept binding commitments from Amazon if they are sufficient to address the competition concerns.

The Commission’s investigation into Amazon’s conduct started in July 2019, following complaints from several associations of sellers and a preliminary market inquiry. The investigation is part of the Commission’s broader efforts to ensure fair and competitive digital markets in the EU, which also include proposed new regulations on digital services and digital markets.

What is the second investigation about?

The Commission has also opened a second formal antitrust investigation into Amazon, focusing on its criteria for selecting the winners of the “Buy Box” and the “Prime Label” on its platform. The “Buy Box” is a prominent feature on Amazon’s website that allows customers to add products from a specific retailer directly to their shopping carts. The “Prime Label” is a label that indicates to customers that products are eligible for Amazon’s Prime subscription service, which offers benefits such as fast and free shipping.

The Commission will examine whether Amazon gives preferential treatment to its own retail offers and those of marketplace sellers that use its logistics and delivery services, compared to the offers of sellers that do not use these services. The Commission will also investigate whether Amazon artificially influences customers’ choices by setting different conditions for displaying offers on its platform.

The Commission will assess whether these practices affect competition and harm consumers by reducing their choice, increasing prices, or lowering the quality of the products and services offered on Amazon’s platform. The Commission will also consider the potential effects of these practices on innovation and market entry by new or smaller sellers.

The second investigation is separate from the first one, but it is based on the same legal basis and covers the same markets. The Commission has not yet issued a statement of objections to Amazon in this case, and the investigation is still ongoing.

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