The European Commission, the European Union’s executive arm, said on Tuesday that Amazon has committed to addressing the government’s competition concerns over the online retailer’s use of seller data.
According to a statement from Margrethe Vestager, EVP in charge of competition policy at The European Commission, these new commitments cover “obligations” that will reshape three central pillars of Amazon’s marketplace ecosystem: first, its use of data; second, the conditions of access to the “Buy Box;” and third, the conditions of access to the Prime program.
When it comes to data, Vestager said that Amazon has now agreed to refrain from using non-public seller data to the benefit of its retail operations. “This is the equivalent to creating a data silo. It means that Amazon will not be able to use insights about other sellers’ operations on its platform to optimise its own retail decisions,” Vestager said.
Vestager added that this data commitment will prevent Amazon from “calibrating its business decisions” using data generated by the activities of independent sellers, thus restoring a level playing field on the platform.
Under the Buy Box commitment, Vestager noted that Amazon will apply “non-discriminatory conditions” and criteria for the selection of offers to appear in the Buy Box. Additionally, Amazon commits to displaying a second Buy Box. The second box will appear immediately below the first one when there is a second offer that is different from the first one on price or delivery. As Amazon cannot populate both Buy Boxes with its own retail offers, this will give more visibility to independent sellers, Vestager added.
The Prime commitment has four sets of changes, the EVP said. First, Amazon will apply non-discriminatory conditions and criteria for sellers to qualify for the Prime Program. This means that there will be no discrimination between Amazon offers and offers of sellers that use independent carriers for Prime deliveries.
Second, Prime sellers will be free to choose any carrier for their logistics and delivery services. They will be able to negotiate terms directly with the carrier of their choice. Third, Amazon commits that no data generated by the activity of other carriers would flow to Amazon logistics. And fourth, Amazon will no longer prevent carriers from contacting the end customer directly by email to track their parcels.
Amazon’s compliance with all the aspects of the package will be ensured by both a complaint mechanism and a monitoring trustee, Vestager said. The complaint mechanism will be open to sellers and carriers to report suspected non-compliance.
Vestager added that all of these commitments must be implemented by June 2023.
“Today’s decision sets new rules for how Amazon operates its business in Europe,” Vestager said. “Amazon can no longer abuse its dual role and will have to change several business practices. Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice.”
FN has reached out to Amazon for comment.
In July 2019, the Commission opened a formal investigation into Amazon’s use of non-public data of its marketplace sellers. In November 2020, the Commission adopted a “Statement of Objections” in which it preliminarily found Amazon dominant on the French and German markets, for the provision of online marketplace services to third-party sellers. It also found that Amazon’s reliance on marketplace sellers’ non-public business data to calibrate its retail decisions “distorted” fair competition on its platform and prevented effective competition.
That same month, the Commission opened a second investigation to assess whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products under its Prime Program led to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.
In the second investigation, the Commission preliminarily concluded that Amazon abused its dominance in the French, German and Spanish markets for the provision of online marketplace services to third-party sellers.
It also preliminarily concluded that Amazon’s rules and criteria for the Buy Box and Prime unduly favor its own retail business, as well as marketplace sellers that use Amazon’s logistics and delivery services.
If Amazon were to have been found guilty of these antitrust claims, it could have faced a fine worth up to 10% of its global annual revenues. For Amazon, a company that made $469.81 billion of revenue in 2021, that could have meant a $47 billion penalty.
However, if Amazon were to breach the commitments it made on Tuesday, the Commission could still impose a fine of up to 10% of Amazon’s total annual turnover, without having to find an infringement of EU antitrust rules or a periodic penalty payment of 5% per day of Amazon’s daily turnover for every day of non-compliance.
Alongside this case, Amazon is also under investigation by the U.K.’s Competition and Markets Authority (CMA) over concerns that the company is giving an unfair advantage to its own retail business and sellers over third-party merchants on its marketplace.
The CMA said in July that it is looking into the U.S. e-commerce giant’s practices affecting sellers on its U.K. marketplace which “may be anti-competitive and could result in a worse deal for customers.”