Economy

Amazon faces more investigations by the the European Union

12 Nov, 2020

As the authorities in Europe take a skeptical view of Amazon's business practices the European Commission "opened a second investigation into the commercial practices" of the American online sales giant. This was announced at a press conference in Brussels by European Competition Commissioner Margrethe Vestager.

Amazon is accused "of violating EU antitrust rules by distorting competition in online retail markets”. The Commission claims that Amazon systematically relies on non-public corporate data of independent vendors operating in its market for the benefit of its retail business, which competes directly with those third party vendors.

The latest antitrust case against Amazon refers to possible preferential treatment of Amazon's retail offerings, toward vendors using the U.S. company's own logistics and delivery services.

In presenting its allegations against Amazon for the use of third-party vendors' data, the Commission stresses the multinational's dual role: "it provides a market where independent vendors can sell products directly to consumers" and at the same time "sells products as a reseller in the same market, in competition with such vendors".

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As a market service provider, Amazon has access to non-public corporate data from third-party vendors: orders and deliveries, revenues, number of user visits, shipping terms, past performance, complaints and warranties activated.

"The Commission's preliminary results," they note from Brussels, "show that very large amounts of non-public vendor data are available to employees in Amazon's retail business and flow directly into Amazon's automated retail business systems, which aggregates this data and uses it to calibrate the US giant's own retail offerings and strategic business decisions to the detriment of other vendors in the market.” For example, it allows Amazon to focus its offerings on best-selling products across all product categories and to adapt its offerings to non-public data from competing vendors.

In the Commission's view, the use of non-public market vendor data allows Amazon to "avoid the normal risks of retail competition and exploit its dominant position in the market for the provision of market services in France and Germany: the largest markets for Amazon in the EU.”

If the charges are confirmed, this would violate Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant position in the market.

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In addition, the Commission has opened a second antitrust investigation into Amazon's business practices that could favour its own retail offerings, and the offerings of vendors in the market that use Amazon's own logistics and delivery services.

In particular, Brussels intends to assess whether the criteria set by the multinational company to select the winner of the "Buy Box” (which allows vendors to offer products to Prime users) determine "preferential treatment in Amazon's retail business. If proven, the practice under investigation may violate Article 102 of the Treaty on the Functioning of the European Union (TFEU) which prohibits abuse of a dominant position in the market.

The announcement from Brussels is, however, a preliminary one. Any penalties or fines for Amazon could take many months, or even years, to be determined should that be the case. Amazon now has a chance to respond to the accusations, which leaves the possibility for a settlement or the case being dropped on the table.