UPDATED 13:15 EDT / NOVEMBER 10 2020

POLICY

In preliminary antitrust findings, EU says Amazon broke competition law

Amazon.com Inc.’s e-commerce business has breached European Union competition law, according to the preliminary findings of an antitrust investigation published today.

The investigation was conducted by the European Commission, the EU’s executive branch and top competition authority. It focused on Amazon’s relationship with third-party merchants that sell goods on its e-commerce marketplace. Amazon in many cases competes with those third-party merchants by offering its own rival “private label” products on its marketplace.

Retailers selling their own products via their distribution channels is not an unusual phenomenon. The issue, according to the European Commission’s preliminary findings, is that Amazon has used nonpublic data about third-party merchants’ sales to boost its own products. Amazon allegedly gained an unfair competitive advantage by taking advantage of information such as the number of product orders third-party merchants receive and the number of orders they deliver. 

“The Commission’s preliminary view, outlined in its Statement of Objections, is that the use of nonpublic marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany — the biggest markets for Amazon in the EU,” the European Commission said in a statement.

In conjunction with the release of these findings, the European Commission today announced that it has opened a separate antitrust probe into Amazon over another possible antitrust violation. That probe also focuses on the company’s e-commerce business. Officials are concerned that the online retail giant may be giving preferential treatment on its marketplace to its own products and to products from sellers that use its logistics and delivery network to ship their goods.

“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,” said European Commission Executive Vice President Margrethe Vestager, who leads the EU’s competition policy.

“We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts,” Amazon said in a statement. “No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”

Amazon has also faced scrutiny over third-party seller data in the U.S. The Wall Street Journal reported this year that Amazon executives had accessed sales data from third-party merchants to inform product development, even though the company has a policy in place prohibit such data misuse. When asked about the report during a virtual congressional hearing this year, Amazon Chief Executive Jeff Bezos stated that “we continue to look into that very carefully. I’m not yet satisfied that we’ve gotten to the bottom of it.”

The case may have a ways to go before it’s resolved. “The findings of the Commission at this stage are interim and Amazon can still persuade the Commission that its practices do not amount to an abuse of a dominant position,” said Ron Moscona, an antitrust expert and partner at the London office of the law firm Dorsey & Whitney.

The same congressional hearing was attended by the CEOs of Apple Inc., Facebook Inc. and Alphabet Inc., three fellow tech giants that are currently all facing investigations over various business practices. And the companies may soon face even more regulatory pressure in the EU. The EU is developing draft rules that could reportedly place new restrictions on how tech giants employ user data, as well as grant more protections to third parties offering products via tech giants’ platforms. 

Photo: Amazon

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