On November 10th, the European Commission (“EC“), European Union’s antitrust authority, announced that Amazon “has breached EU antitrust rules by distorting competition in online retail markets”. The concern raised by the EC was that Amazon has been giving preferential treatment to its own retail offers by relying on non-public business data of independent sellers who sell on its marketplace and using such data for the “benefit of Amazon’s own retail business, which directly competes with those third party sellers”, thereby abusing its dominant position under Article 102 of the Treaty on the Functioning of the European Union (“TFEU“).
The EC notes that Amazon has access to non-public business data of third party sellers such as the number of ordered and shipped units of products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, data relating to shipping, to sellers’ past performance, and other consumer claims on products, including the activated guarantees. There is also preliminary evidence which suggests that this data is being provided to Amazon’s own retail business which is being used to make such business and commercial decisions which is competing with independent sellers.
In July 2019, the EC had launched a formal investigation into Amazon’s practices to assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is in breach of the TFEU, and specifically Article 101 which prohibits anticompetitive agreements and decisions of associations of undertakings that prevent, restrict or distort competition within the EU’s Single Market and Article 102 which prohibits the abuse of a dominant position.
The EC has now opened a second antitrust investigation into Amazon’s business practices that might artificially favour its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services (the so-called “fulfilment by Amazon or FBA sellers”). The EC will also be looking at Amazon’s services such as “Buy Box” and the criteria to select the winner of the same as well as the loyalty programme offering products to “Prime” users with speedy deliveries and authenticity guarantees to certain sellers.
Executive Vice-President of the EC, Margrethe Vestager, said: “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. The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour 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.”
Reported by Tanya Varshney, Chief Editor