EC Hits Amazon With Competition Rule Violations

Amazon is facing trouble in the European Union, after its regulatory watchdog issued charges against the e-commerce retail giant.

The European Commission today hit Amazon with its “Statement of Objections”, which it says concerns “the use of non-public independent seller data”.

Essentially the EC is alleging that Amazon used data on third-party sellers that use its marketplace in order to gain a competitive advantage.

Sensitive data

Furthermore, the EC also revealed that it has launched a second investigation into the possible preferential treatment of sellers that use Amazon’s logistics and delivery services.

“The European Commission has informed Amazon of its preliminary view that it has breached EU antitrust rules by distorting competition in online retail markets,” the EC announced. “The Commission takes issue with Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third party sellers.”

“The Commission also opened a second formal antitrust investigation into the possible preferential treatment of Amazon’s own retail offers and those of marketplace sellers that use Amazon’s logistics and delivery services,” it added.

The EC is concerned that Amazon has access to sensitive data from small and medium-sized companies that use its platform, such as sales figures, page visits or shipping information.

The EC feels that Amazon then uses this to help with sales of its own-label products, or in choosing suppliers.

Competition impact

Competition executive VP Margrethe Vestager, pointed out that the EC began its investigation back in July about how Amazon uses this sensitive data.

She said that investigation started as a follow-up to the EC 2015 inquiry into e-commerce, where the European Commission gathered a first insight on Amazon’s business practices.

“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” said Vestager. “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.”

“The conditions of competition on the Amazon platform must also be fair,” said Vestager. “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,” she added.

Vestager pointed out that Amazon is at the centre of online shopping. More than 70 percent of consumers in France and more than 80 percent 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,” she said. “Our concern is a very specific business conduct, which appears to distort genuine competition.”

Amazon rebuttal

But Amazon has rejected the EC charges, and said it offered consumers more, not less, choice.

In a statement published by the BBC, Amazon insisted that – far from being anti-competitive – its private-label products were good for customers and offered more choice.

“Amazon represents less than 1 percent of the global retail market, and there are larger retailers in every country in which we operate,” it reportedly said.

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

The BBC reported that Amazon also pointed out that there are more than 150,000 European businesses selling through its online marketplace.

If it were found guilty, Amazon cold face a potential fine as high as 10 percent of its global turnover.

This would entail a possible fine of approximately £15bn ($19bn)…which would sting a little.