EU Opens Antitrust Investigation of Amazon
The probe will examine the way in which Amazon uses the data it collects from independent retailers that sell their products on the Marketplace platform.
July 17, 2019 at 03:07 PM
4 minute read
The original version of this story was published on Law.com
The European Commission has opened an antitrust investigation of Amazon to determine whether the company is using sales data to gain an unfair advantage over smaller sellers on its Marketplace platform.
Margrethe Vestager, the EU's antitrust chief, said the investigation is warranted because European consumers are increasingly shopping online and e-commerce has boosted retail competition and brought more choice and better prices.
“We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behaviour,” she said. “I have therefore decided to take a very close look at Amazon's business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”
The investigation will examine the way in which Amazon uses the data it collects from independent retailers that sell their products on the Marketplace platform. Following a preliminary investigation, the Commission found that this information about sellers, their products and transactions could have implications for competition.
The Commission will focus on standard agreements between Amazon and Marketplace sellers, which allow Amazon's retail business to analyse and use third-party seller data.
It will also study the role of data in the selection of the winners of the “Buy Box,” a special feature that allows shoppers to add items from a retailer directly into their shopping cart. The Commission says that winning the “Buy Box” is crucial for Marketplace sellers, as the vast majority of transactions are done through it.
In a statement, Amazon said it “will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”
The announcement comes on the same day that Amazon announced changes to its third-party seller service agreement in response to a separate antitrust investigation by German regulators.
Lawyers said Amazon could prove vulnerable in the investigation.
“It is interesting that the Commission is running this case under both Article 101 of the EU Treaty, which prohibits agreements between companies that undermine competition, and Article 102, which deals with abuse of a dominant position,” said José Rivas, a partner with Bird & Bird in Brussels. “Amazon may be up for a tough fight with the Commission even if it is not dominant in a given market on the easier-to-prove basis that Amazon colluded with competitors.”
Rivas added that it was “significant” that the Commission alleges that Amazon's continuous collection of data about the activity of competitors and users on its platform allows Amazon's retail business to analyse and use third-party seller data.
The “misuse” of data to foreclose secondary markets has been identified as an area of focus by the report, “Competition Policy for the Digital Area,” which was recently produced for the Commission, Rivas said.
“The report proposes, with a view to avoid foreclosure of secondary markets, 'an update of the traditional competition law analysis of aftermarkets, which in the present form does not take into account the specificities of data,” he said.
The Commission has set no deadline for completing the probe, which is the latest antitrust action opened by Vestager, who has served as the competition commissioner on the European Commission for the past five years. During her tenure, which is due to end in October, Vestager has fined almost all of the major tech giants, including Google, Qualcomm and Facebook. She was also behind a ruling that forced Apple to pay back $15.4 billion in taxes.
Amazon has had to face challenges by the Commission before. Two years ago, it was told to pay back taxes of about 250 million euros ($280 million) to Luxembourg because of illegal tax benefits. That same year it settled with the regulator over its distribution deals with e-book publishers in Europe.
Vestager's mandate as competition Commissioner comes to an end in October. But she has been nominated to a senior position in the European Commission for the next five years so she may well still influence EU competition policy.
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