European Commission opens antitrust investigation of Amazon

by Bamidele Ogunberu Posted on July 20th, 2019

Brussels: In a press release, the European Commission (EC) opened an investigation into Amazon for possible anti-competitive conduct to “assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is a breach in EU competition rules.”

Commissioner Vestager stated that the EC is seeking to ensure that “large online platforms don’t eliminate benefits” of choice and better prices through anti-competitive behavior.

The EC has conducted preliminary fact-finding that appears to show that Amazon, as a marketplace where independent sellers market directly to customers, has used “competitively sensitive information.”

An in-depth investigation will look at two areas; first, the standard agreements between Amazon and independent sellers and, second, the role of data in the selection of the winners of the ‘Buy Box.’ This investigation will analyze whether and how the collection and use of these data affect competition and selection.

This investigation may uncover that these practices breach EU competition rules on anti-competitive agreements between companies.

Below is the press release:

Antitrust: Commission opens investigation into possible anti-competitive conduct of Amazon

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” andthe 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.

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