Amazon faces EU antitrust investigation over use of merchant data

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The European Commission has opened a formal antitrust investigation to assess whether Amazon has used sensitive data, such as sales records, from independent third-party sellers.

“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 behavior. 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.”

Commissioner Margrethe Vestager, in charge of competition policy

The European Commission stated that Amazon has a dual role as a platform:

  • It sells products on its website as a retailer
  • It provides a marketplace where independent sellers can sell products directly to consumers.

On the 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.

Investigation

As part of the Commission’s investigation, it will look into:

  • The standard agreements between Amazon and marketplace sellers, which allow Amazon’s retail business to analyze 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” and the 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.

The Commission says it will carry out its in-depth investigation as a matter of priority.

If proven, they could find Amazon breaching 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 noted the opening of a formal investigation does not prejudge its outcome.

Germany drops antitrust case against Amazon

The news of the EU investigation into potential antitrust violations by Amazon comes on the same day the retail giant appeared to appease German regulators.

The German Federal Cartel Office announced on Wednesday it was dropping its seven-month investigation into Amazon after the online retailers agreed to amend a Business Services Agreement that applies to third-party marketplace merchants.

The changes to its Business Solutions Agreement will go into effect on August 16 and also apply to marketplace merchants outside Germany, including the US and UK.

Here are the highlights of the changes Amazon is making its Business Solutions Agreement (Source: US Seller Central notification):

  • General Terms “Introduction”: we are clarifying seller contractual obligations by defining a discrete set of Program Policies.
  • Section 3 “Term and Termination”: we are adding more specific information about account suspension and termination and we are providing for a right to appeal such actions in certain circumstances.
  • Section 4 “License”: we are narrowing the scope of the limited license sellers give us to their intellectual property.
  • Section 6 “Indemnification”: the obligation to indemnify will apply mutually to both parties.
  • Section 15 “Modification”: we will provide advance notice when we modify the BSA, except where needed to protect customers.
  • Section S-3.2 “A-to-z Guarantee”: we will provide an express right to appeal our A-to-z determinations.
  • Section F-7 “Returns to You and Disposal”: we have revised the procedure for refusing, removing, or disposing of FBA inventory.

Note: Sellers should read the details of the changes on the Amazon marketplace(s) they use.

If and how these changes to the Business Solutions Agreement may impact the investigation by the EU Commission is unclear.

Amazon said it would cooperate fully with the EU probe.

READ MORE: Amazon Prime Day surpassed Black Friday and Cyber Monday combined


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