The European Union’s Competition Commission has initiated an official antitrust investigation to ascertain if Amazon is using sensitive data, gathered from independent retailers who use its marketplace, in breach of EU competition legislation.
The Commission says it will review how Amazon’s agreements with marketplace sellers operate, as well as how the company uses data to decide which retailer to link to using the “Buy Box” on its platform.
This move comes as other Internet giants, including Google and Facebook, have been subject to complaints from competition and industry experts. These complaints have have resulted in antitrust enforcers worldwide reviewing how these companies use data to increase their market power
The Amazon platform performs two roles. Firstly it allows the sale of products on its website as a retailer and, secondly, it provides an area called marketplace where independent sellers can sell products directly to consumers. As part of the operation of the marketplace, Amazon gathers data in relation to the activity that takes place on its platform.
According the the preliminary fact-finding completed by the Competition Commission, it appears that Amazon has been using competitively sensitive information about marketplace sellers, their products and transactions on the marketplace.
The Competition Commision is now going to review the following two areas:
- Standard agreements between Amazon and marketplace sellers: These give permission for Amazon’s retail business to analyse and use third party seller data. The main focus here will be if Amazon is influencing competition by using accumulated marketplace seller data.
- Data influencing the ‘Buy Box’ winners: The ‘Buy Box’ option allows customers to add items from a specific retailer directly into their shopping carts. It is displayed clearly as a call to action on Amazon. Being selecting for the ‘Buy Box’ is a big boost for any retailers using the platform.
The Competition Commission had, up to now, be in a difficult position when trying to define the market in which Amazon operates. This had to be defined so that any cases of possible competitive harm could be investigated properly. This investigation is not Amazon’s first encounter with the Competition Commission. In 2017 the company was ordered to pay back taxes of about €250m to Luxembourg due to illegal tax benefits it was trying to avail of. However, to date, Amazon has not been subjected to any fines from the E.U.
EU’s Competition Commissioner Margrethe Vestage commented on the investigation saying: “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 behavior. 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.”
Amazon released a statement following the announcement of the investigation saying: “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”
- Liability provisions towards sellers to bring it into line with required European standards for B2B deals.
- Account termination and blocking to remove its unrestricted right to do so without providing any justification. This means that basic account terminations will, going forward, require just 30 days notice.
In a statement, Amazon said: “We are making several changes to the Amazon Services Business Solutions Agreement to clarify selling partner rights and responsibilities. The changes will become effective August 16th. 58% of the physical gross merchandise sales on Amazon are from third-party sellers, and we’ll continue working hard, investing heavily, and inventing new tools and services to help our selling partners around the world reach new customers and grow their business.”
