Amazon avoids fine as it reaches EU antitrust settlement

Amazon has agreed to make changes to its business in Europe as part of a settlement with the European Union (EU) over antitrust investigations that could have resulted in a large fine. 

Within the EU, Amazon will make the Buy Box more competitive, allow third-party merchants to participate in Prime while using outside logistics providers, and block Amazon from using internal data to compete with third-party merchants. 

Margrethe Vestager, EU executive vice-president in charge of competition policy, said: “Today’s decision sets new rules for how Amazon operates its business in Europe. Amazon can no longer abuse its dual role and will have to change several business practices. They cover the use of data, the selection of sellers in the Buy Box and the conditions of access to the Amazon Prime programme. Competing independent retailers and carriers as well as consumers will benefit from these changes, opening up new opportunities and choice.” 

Amazon said it was pleased that it had addressed the European Commission’s concerns. 

“While we continue to disagree with several of the preliminary conclusions the European Commission made, we have engaged constructively to ensure that we can continue to serve customers across Europe, and support the 225,000 European small and medium-sized businesses selling through our stores,” an Amazon spokesperson said. 

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 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. 

It then 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 programme lead 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 on 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 favour its own retail business, as well as marketplace sellers that use Amazon’s logistics and delivery services. 

To address the commission’s competition concerns in relation to both investigations, Amazon offered a series of commitments, including “not using non-public data relating to, or derived from, the independent sellers’ activities on its marketplace, for its retail business. This applies to both Amazon’s automated tools and employees that could cross-use the data from Amazon Marketplace, for retail decisions”. Amazon will also “not use such data for the purposes of selling branded goods as well as its private label products”. 

On the Buy Box concern, the company will “treat all sellers equally when ranking the offers for the purposes of the selection of the Buy Box winner; display a second competing offer to the Buy Box winner if there is a second offer from a different seller that is sufficiently differentiated from the first one on price and/or delivery. Both offers will display the same descriptive information and provide the same purchasing experience”.

On participating in Prime, the company will “set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime; allow Prime sellers to freely choose any carrier for their logistics and delivery services and negotiate terms directly with the carrier of their choice; not use any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services”.

Following a consultation period, Amazon amended the initial proposal and also committed to “increase to seven years, instead of the initially proposed five years, the duration of the commitments relating to Prime and the second competing Buy Box offer”.

Other modifications include agreeing to “improve the presentation of the second competing Buy Box offer by making it more prominent and to include a review mechanism in case the presentation is not attracting adequate consumer attention”; and to “lay out the means for independent carriers to directly contact their Amazon customers, in line with data-protection rules, enabling them to provide equivalent delivery services to those offered by Amazon”.

The commission found that Amazon’s final commitments “will ensure that Amazon does not use marketplace seller data for its own retail operations and that it grants non-discriminatory access to Buy Box and Prime”. The commission decided to make them legally binding on Amazon. 

The offered commitments cover all Amazon’s current and future marketplaces in the European Economic Area. They exclude Italy for the commitments relating to the Buy Box and Prime in view of the decision of 30th November 2021 of the Italian competition authority imposing remedies on Amazon with regard to the Italian market. 

The final commitments will remain in force for seven years in relation to Prime and the display of the second competing Buy Box offer, and five years for the remaining parts of the commitments. Under supervision of the commission, an independent trustee will be in charge of monitoring the implementation and compliance with the commitments. 

If Amazon were to breach the commitments, the commission could 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.