Spinning Amazon’s Flywheel: How Amazon’s business model harms competition — A view from Europe

Amazon is the largest e-commerce platform in many nations and its revenues have grown consistently over many years. Although Amazon has been subject to some antitrust investigations, competition law still has not fully grappled with the anticompetitive effects of Amazon’s business model, which has the Prime membership bundle of products at its core. For a long time, the prevailing consensus has been that Amazon is consumer-friendly because it drives down prices, speeds up delivery times and offers a bundle of attractive products through its Prime membership programme. This may still be superficially correct if viewed through the narrow prism of the consumer welfare standard with a focus on price. However, Amazon’s strategy is more problematic if we consider the aggregate effects of its various interlinked practices, and if we believe that the role of competition law is to protect a competitive market structure. Such a stance is closer to the approach taken in the EU than the US in recent years, but US progressives are now also seeking to evolve the enforcement of antitrust law.

Against this background, this paper has two objectives. First, it seeks to show that Amazon’s problematic conduct, although diverse in nature and covering several distinct markets, includes vertical integration and the acquisition of rivals, exclusionary conduct, and the imposition of unfair trade terms and conditions. Second, with a focus on EU and UK law, it seeks to show that these problems require a combination of ex ante intervention (legislation such as the EU’s Digital Markets Act and the UK’s forthcoming Digital Markets, Competition and Consumer Bill and tighter merger control) and ex post intervention (tighter control of abusive conduct).

Read the full paper here.