Amazon charged with illegally distorting eCommerce competition

Amazon has illegally distorted competition in online retail markets, according to the preliminary conclusions of an EU Commission investigation into the tech giant’s use of sensitive data.

The investigation, which began in July 2019, found that Amazon “illegally abused its dominant position as a marketplace service provider in Germany and France.” The Commission also announced it will begin a second investigation into the company’s eCommerce practices.

This conclusion was reached after the discovery that granular, real-time business data relating to third party sellers’ listings and transactions feed into Amazon’s retail business algorithms, upon which it makes decisions on areas such as new product launches, prices and inventory management.

Therefore, Amazon gains deep insights into over 800,000 active sellers in the EU using its platform. This includes the number of orders of individual products, the sellers’ revenues on the marketplace and the consumer claims of sellers’ products, enabling it to “draw precise, targeted conclusions.”

The Commission expressed concern that through this aggregation of data of third party sellers, Amazon is able to avoid the risks that other retailers have to take when investing in new products or choosing a specific price level. It noted that in many of the most popular product categories, Amazon makes 50% or more of all the revenues despite listing under 10% of the products available on them.

The Commission added: “This marginalises third party sellers and caps their ability to grow,” thereby breaking EU competition law.

Amazon will have the opportunity to respond to these conclusions in the coming weeks.

A second investigation will look at whether Amazon has set rules on its platform that artificially favour its own retail offers and those of sellers that utilise its logistics and delivery services.

The Commission commented: “Both investigations into Amazon’  business practices focus on competition concerns that are crucial in today’s platform economy where more and more businesses depend on dominant platforms, and where more and more consumers use these platforms’ services. It is the role of competition law enforcement to keep these markets open and to ensure undistorted competition.”

In response,  an Amazon spokesman said: “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 represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate.

“No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”