Antitrust Law Daily EC probes competitive implications of Amazon’s dual role as marketplace and retailer
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Wednesday, July 17, 2019

EC probes competitive implications of Amazon’s dual role as marketplace and retailer

By Jeffrey May, J.D.

Amazon’s potential use of competitively sensitive marketplace seller information is under scrutiny. Meanwhile, the company agreed to changes in terms with sellers to resolve concerns of Germany’s competition authority.

The European Commission (EC) announced today that it 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 European Union (EU) competition rules. The announcement from Brussels comes the same day that Amazon reached a settlement with Germany's Cartel Office, or Bundeskartellamt, resolving concerns over questionable business terms with third-party sellers were active on the marketplace amazon.de.

EC investigation. The EC is investigating whether Amazon's apparent use competitively sensitive information about marketplace sellers, their products, and transactions on the online marketplace, violates EU competition rules. According to the EC announcement, Amazon has a dual role as a platform: (1) it sells products on its website as a retailer; and (2) it provides a marketplace where independent sellers can sell products directly to consumers. The EC has made the preliminary determination that Amazon appears to use competitively sensitive information collected on its platform about marketplace sellers, their products and transactions on the marketplace.

In its investigation, the EC will try to determine the impact on competition of Amazon's potential use of competitively sensitive marketplace seller information on the selection of the winners of the "Buy Box." Winning the "Buy Box" is important for retailers as the vast majority of Amazon transactions are completed in it.

Amazon has pledged to cooperate in the investigation. "We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow," said a company spokesperson.

German cartel office settlement. While the EC is looking at Amazon’s use of data and its effects on marketplace sellers, Germany's Bundeskartellamt announced a settlement with Amazon, requiring the company to make improvements in its terms with sellers on the company’s online marketplaces. In response to retailer complaints, the German competition authority was investigating whether the company was abusing its dominance. According to the announcement, the sellers expressed concerns over the unilateral exclusion of liability to Amazon’s benefit, the termination and blocking of sellers’ accounts, the court of jurisdiction in case of a dispute, the handling of product information, and other issues. Under the settlement announced today, Amazon has agreed to amend the terms so that they are no longer so one-sided.

U.S. congressional scrutiny. The announcements from Europe come one day after a successful Prime Day but tough pressure from U.S. lawmakers on the company’s treatment of sellers and employees. At a hearing held by the House Judiciary Committee's antitrust subcommittee on June 16, the company’s Associate General Counsel for Competition faced tough questions from Democratic lawmakers about Amazon’s treatment of its sellers. Rep. David N. Cicilline (D., R.I.), chairman of the antitrust subcommittee, raised some of the issues at the heart of the EC and German inquiries. He also questioned whether Amazon’s "steady fee hikes" imposed on sellers reflect a pure exercise of Amazon’s buyer power. Amazon’s Nate Sutton denied that the company was treating sellers anticompetitively and contended that fees had remained steady or slightly declined.

Amazon also faced criticism from Senator Bernie Sanders (I., Vt.) and other members of Congress over workplace safety issues at Amazon warehouses. The lawmakers sent a letter on July 16 urging the Department of Labor to immediately investigate the facilities. The company responded with an open invitation to Sanders "to visit a facility of his choosing to see for himself what it is like to work at Amazon."

Companies: Amazon Inc.

MainStory: TopStory Antitrust

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