The European Commission opened an antitrust investigation into whether Amazon uses third-party merchant data in breach of EU rules. Amazon’s dual role as marketplace and retailer puts it in an unusual position, and the Commission wants to study how Amazon might use its access to sensitive retailer data to “win the Buy Box.”
The European Commission competition department tweeted the news this morning.
In related news, Amazon reached a deal with Germany’s anti-trust authority to overhaul its terms of service for third-party merchants, according to Reuters.
Press release follows:
The European Commission has opened a formal antitrust investigation to assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules.
Commissioner Margrethe Vestager, in charge of competition policy, said: “European consumers are increasingly shopping online. 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. 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 has a dual role as a platform: (i) it sells products on its website as a retailer; and (ii) it provides a marketplace where independent sellers can sell products directly to consumers.
When providing a marketplace for independent sellers, Amazon continuously collects data about the activity on its platform. Based on the Commission’s preliminary fact-finding, Amazon appears to use competitively sensitive information – about marketplace sellers, their products and transactions on the marketplace.
As part of its in-depth investigation the Commission will look into:
- the standard agreements between Amazon and marketplace sellers, which allow Amazon’s retail business to analyse and use third party seller data. In particular, the Commission will focus on whether and how the use of accumulated marketplace seller data by Amazon as a retailer affects competition.
- the role of data in the selection of the winners of the “Buy Box” and the impact of Amazon’s potential use of competitively sensitive marketplace seller information on that selection. The “Buy Box” is displayed prominently on Amazon and allows customers to add items from a specific retailer directly into their shopping carts. Winning the “Buy Box” seems key for marketplace sellers as a vast majority of transactions are done through it.
If proven, the practices under investigation may breach EU competition rules on anticompetitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and/or on the abuse of a dominant position (Articles 102 TFEU).
The Commission will now carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.
Background
Article 101 of the TFEU prohibits anticompetitive agreements and decisions of associations of undertakings that prevent, restrict or distort competition within the EU’s Single Market. Article 102 of the TFEU prohibits the abuse of a dominant position. The implementation of these provisions is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can also be applied by the national competition authorities.
Article 11(6) of the Antitrust Regulation provides that the opening of proceedings by the Commission relieves the competition authorities of the Member States of their competence to apply EU competition rules to the practices concerned. Article 16(1) further provides that national courts must avoid adopting decisions that would conflict with a decision contemplated by the Commission in proceedings it has initiated.
The Commission has informed Amazon and the competition authorities of the Member States that it has opened proceedings in this case.
There is no legal deadline for bringing an antitrust investigation to an end. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence.
More information on the investigation will be available on the Commission’s competition website, in the public case register under case number AT.40462.
SOURCE: European Commission Press Release
Is anyone shocked? This is ABSOLUTELY what Amazon has been doing for as long as I can remember. They’ve even stated at times that the collection of data is one of the crucial elements to their business, and in a sense, IS their business. With it, they know what a buyer wants, when they’ll buy, what price they’ll buy at. They’ve collected all of this through 3p platform sales – when they see products which they identify as being good (and profitable) sellers, they then go directly to the manufacturer and try and purchase those to sell themselves. I’ve been at trade shows where I’ve seen Amazon representatives walking up to company officials, huge PO’s in hand – cutting us out of the market, so to speak (as if Amazon sells a product, everyone else’s sales drop to nearly 0).
I don’t have an issue with competition. But where the problem arises is that due to their position, they have an unfair advantage, Not only that, but they use that platform to further extend that advantage by fixing the buy box so that their offer is almost always the one that appears to the customer – even if lower prices exist. (They do this by emphasizing “trust”, which factors in things like FB scores. But, they make it so that Amazon is ALWAYS the most trusted source, even though they do not show their FB score, as if they did, their score would be so abysmally low that they’d be removed from the site as a seller!)