21 Dec 2022

Amazon settles two European antitrust investigations

The European Commission has accepted a set of legally-binding commitments offered by Amazon to settle two long-running antitrust investigations into whether Amazon has abused its dominant position in e-commerce.  In doing so, the Commission will not issue a formal infringement decision and will not impose a fine. The commitments will be of relevance to the 225,000 European businesses who rely on Amazon to reach their retail customers, and they have been tightened to some extent since the draft commitments that were published in July 2022. However, Amazon should feel lucky to have escaped without an infringement finding and with some manageable tweaks to what were arguably some egregious practices.

The commitments are limited to remedying some specific and narrowly-framed allegations that: (a) Amazon uses third-party sellers’ data when competing against them, and (b) the rules and criteria for the Buy Box and Prime unduly favour Amazon’s own retail business, as well as marketplace sellers that use Amazon’s logistics and delivery services.

Regarding third-party data, Amazon is committing not to use non-public third-party seller data in competition with those sellers. Regarding the Buy Box, Amazon is committing to apply equal treatment to all sellers when ranking their offers for the purposes of the selection of the winner of the Buy Box. It is also committing to display a second competing offer to the Buy Box winner if there is a second offer that is sufficiently differentiated from the first one on price and/or delivery. Regarding Prime, Amazon is committing: (a) to set non-discriminatory conditions and criteria for sellers to qualify for Prime, (b) to allow Prime sellers to freely choose any carrier for their logistics and delivery services and negotiate terms directly with the carrier of their choice, (c) not to use any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services, and (d) to no longer prevent sellers from contacting the consumer directly. 

There are some significant limitations to the commitments. They apply only to Amazon Marketplace sellers and therefore do not help vendors (i.e., brands, manufacturers, wholesalers) who sell their goods to Amazon for Amazon itself to resell on Amazon.com. Amazon can continue to use vendor data however it wishes, and it is also free to push third-party sellers into becoming vendors. These commitments also do not touch upon many of the broader criticisms that are levelled at Amazon such as the way in which its Prime bundle of products locks in consumers and excludes competitors; various ways in which its own products are given preferential treatment in the listings of its e-commerce platform; the difficulty that sellers encounter in accessing their own sales data; Amazon’s fees and commissions; and its use of most-favored nation clauses. The commitments do not affect the US, the UK or anywhere outside of the European Economic Area.

Amazon has still therefore done relatively well in avoiding competition law hazards compared to its Big Tech rivals such as Apple and Google. It has received no adverse decisions or fines at the EU level; it has not formally been subject to US Department of Justice or Federal Trade Commission proceedings; and it has not been the subject of a market study by the Competition and Markets Authority (“CMA”) in the UK. It also has not been subject to any merger prohibitions, despite making frequent acquisitions of companies such as iRobot (2022), One Medical (2022), MGM Studios (2021), Ring (2018), Blink (2017), and Evi Technologies (2013) to help develop its smart home products, video streaming content, door security, cameras and voice assistant respectively.

Attention will now be on the CMA, which still has an ongoing investigation into Amazon on the same subject matter as the Commission’s. The CMA may simply seek to expand the geographical scope of the Commission’s commitments to include the post-Brexit UK, or it may choose to go further than the Commission by imposing more stringent remedies or a full infringement decision with a fine.

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