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EU accuses Amazon of warping competition on its marketplace

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·Senior City Correspondent, Yahoo Finance UK
·3-min read
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Watch: Amazon faces new probe over sales in EU antitrust complaint

The European Union’s top competition watchdog has concluded that Amazon (AMZN) is unfairly warping the online retail market by collecting private data on independent sellers that use its platform and then using the data against them.

The European Commission said in a statement on Tuesday it had informed Amazon of its “preliminary view” that the online giant was “distorting competition” through the use of data on its Marketplace platform.

Amazon collects data on businesses that use Marketplace to sell their goods — everything from toilet roll and toys to food products and homeware. The EU has concluded that Amazon uses the data it collects to compete against independent sellers by spotting products and offers that are doing well and then targeting customers with Amazon own-brand versions instead.

“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” the EU’s top competition official Margrethe Vestager said in a statement.

“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.”

BRUSSELS, BELGIUM - OCTOBER 7: EU Commissioner for A Europe Fit for the Digital Age - Executive Vice President Margrethe Vestager is talking to media about 'commitments by Broadcom to ensure competition in chipset markets for modems and set-top boxes' in the Berlaymont, the EU Commission headquarter on October 7, 2020, in Brussels, Belgium. M. Vestager said: 'Today's decision legally binds Broadcom to respect the commitments. They will ensure that existing chipset makers competing with Broadcom and potential new entrants will be able to compete on the merits. Producers of set-top-boxes and Internet modems, telecom and cable operators and ultimately consumers will benefit from competition between chipmakers in terms of lower prices and more innovative products.' (Photo by Thierry Monasse/Getty Images)
EU competition commissioner Margrethe Vestager. Photo: Thierry Monasse/Getty Images

If the preliminary findings are confirmed by a full investigation, Amazon would be in breach of EU competition law. The findings relate to Amazon's business practices in France and Germany. In August, Germany’s federal cartel office opened a similar investigation of its own.

Separately, the European Commission opened a second probe into Amazon on Tuesday, investigating whether it unfairly gives preferential treatment to sellers that use its logistics and delivery services. The EU has concerns that Amazon may be influenced by these factors when awarding the “Buy Box,” a preferential listing status that appears at the top of searches. The watchdog worries that sellers who don’t use Amazon’s logistics and delivery services are also being unfairly shut out of Amazon Prime.

“The conditions of competition on the Amazon platform must also be fair,” Vestager said. “Its rules should not artificially favour Amazon's own retail offers or advantage the offers of retailers using Amazon's logistics and delivery services.”

Both investigations relate to Amazon’s Marketplace business, which the EU began investigating in July last year.

“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,” Vestager said.

Amazon, however, disagreed with the ruling.

“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. 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,” Amazon said in a statement.

Watch: Amazon, Broadcom face antitrust probes in Europe