Amazon charged with breaching EU antitrust rules

The European Commission (EC) has charged Amazon with abusing its dominant market position in online retail to gain an unfair advantage over its competitors.

Following a year-long probe into potential anti-competitive conduct, the EC has accused the e-commerce giant of illegally using non-public marketplace data about independent third-party sellers on its platform to benefit its own retail business.

It claimed that, as a marketplace service provider that doubles up as a seller itself, Amazon has access to a wide range of non-public business data about the third-party sellers it competes with, which it has used to calibrate its own retail offers and strategic business decisions, to the detriment of others.

“The Commission’s preliminary view is that the use of non-public 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,” said the EC.

The EC has also decided to open up a separate antitrust investigation over concerns that Amazon has given preferential treatment to its own retail business, with sellers paying extra for its logistics and delivery services.

Margrethe Vestager, who oversees  the EU’s competition policy as executive vice-president of the EC, said dual-role platforms like Amazon cannot be allowed to distort competition.

“Data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” she said in a statement. “The conditions of competition on the Amazon platform must also be fair.

“Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services. 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.”

Speaking at a press conference in Brussels on 10 November, Vestager added that the value of online sales in Europe have almost doubled in the past five years, from €370bn in 2015 to almost €720bn in 2020.

“Amazon is at the centre of this market development,” she said. “More than 70% of consumers in France, and more than 80% of consumers in Germany, that made online purchases bought something from Amazon in the last 12 months. We do not take issue with the success of Amazon or its size. Our concern is very specific business contacts which appear to distort genuine competition.”

In response to the antitrust charge and second investigation, an Amazon spokesperson said the company will “make every effort” to ensure the EC has an “accurate understanding of the facts”.

“Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate,” said the spokesperson. “No company cares more about small businesses or has done more to support them over the past two decades than Amazon.

“There are more than 150,000 European businesses selling through our stores that generate tens of billions of euros in revenues annually and have created hundreds of thousands of jobs.”

In early October, following their own 16-month investigation into the competitive practices of Amazon, Apple, Facebook and Google, US lawmakers identified a “pressing need for legislative action and reform” to rein in the monopoly power of these firms.

“First, each platform now serves as a gatekeeper over a key channel of distribution,” the lawmakers said in a report detailing their recommendations on how antitrust laws and enforcement can be changed to regulate the digital economy.

“By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.”

One of the report’s primary policy recommendations was the imposition of “structural separations and line-of-business restrictions” on the companies, which would “prohibit a dominant intermediary from operating in markets that place the intermediary in competition with the firms dependent on its infrastructure… and generally limit the markets in which a dominant firm can engage”.

Vestager has previously signalled that breaking up companies is a last resort, and she would prefer to use fines and other penalties to bring rule-breaking companies back into line.

If Amazon is found guilty by the EC of breaching EU competition law, it faces a potential fine of 10% of its turnover – the equivalent of £15bn.