Europe, Amazon and an antitrust case

antitrust
M
17 Jul 2019

The European Commission launched an antitrust investigation against Amazon. The reason being illicit use of sensitive data from third parties which sell on the platform.

The issue lies in Amazon’s double role as marketplace and reseller; the platform may be violating European Competition laws and, potentially, illicitly using data to overpass these laws. If the investigation results true, Amazon will be charged for abusing its position as market leader and for anti-competition agreements.

An immediate reply from Amazon, stating their full help and collaboration with European authorities lead by Margrethe Vestager.

Marketplace competition

Amazon allows vendors to use the marketplace whilst amassing considerable amounts of information on their activities. Amazon, as a distributor, can gain significant advantages on its own third parties by using the gathered data from other companies.

The gathering and use of all this data are coming to the attention of all vendors. For the first time, Amazon’s sale model is being questioned.

The reasons for this initiative were explained as such by Vestager:

“Consumers are consistently buying more online and hence we must guarantee that the big online platforms do not block consequential benefits by engaging in anti-competition behaviour. For this reason, I have decided to review Amazon’s commercial practices and its double role as marketplace and reseller, to see if the company respects competition laws”

The "buy box"

The Commission will examine the relationships between Amazon and active suppliers on the platform. A focal point of the investigation is the “buy box”, the page which allows customers to view the products in its different purchasing options. The page shows the price and, more importantly, information on other resellers which sell the same product.

If the product in question is not directly managed by Amazon, then “buy box” will direct the customer to one of the interested brands. A company’s positioning in the buy box is proportional to commercial ends, this function is the primary way products are sold on platform. Assuming best practice, if a user searches a product, its offer should be the first thing to appear; or at least it should be displayed as a suggested option among competing brands.

Brussels wants to uncover the role data plays in selection a winner in the buy box and the potential use of sensitive information from the competitions’ point of view.

According to Johannes Kleis, BEUC director, the synthesis is simple:

“If we discover that the most powerful platforms are using gathered data to obtain a competitive advantage, costs fall back on both consumers and the market”

 

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