Amazon agrees to major competitive concessions to avoid fines
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After years of wriggling, Amazon has agreed to make a number of important business practice concessions to the European Commission to avoid paying a looming multi-billion dollar antitrust fine. Though Amazon will pull out of the fray without having to empty its wallet, the concessions could fuel the flames for similar action being pursued in parallel by other government regulators around the world.
This week’s deal ends two years of antitrust investigations that could have metastasized into fines of 10% of Amazon’s annual sales. As part of the concessions, Amazon promised to stop taking non-public data from sellers on its marketplaces and using it to support its own retail business. In addition, the e-commerce giant will set “non-discriminatory terms and criteria” for marketplace sellers in its Prime service, giving Prime sellers the freedom to choose any carrier for their logistics instead of forcing them to use their own logistics service to use Amazon.
Amazon will also take steps to address concerns about anticompetitive behavior in its Buy Box (essentially the Buy Now and Add to Cart sections) of its retail website. The company is committed to treating all sellers there, including their own brands, equally when ranking listings. Perhaps more importantly, however, Amazon will give European customers a second Buy Box if there is another product from another seller “that differs sufficiently in price and/or delivery from the first”.
Overall, the European Commission believes that these changes will help both European consumers and sellers working with the platform. If Amazon fails to meet these obligations, the appointee can still impose a fine of up to 10% of Amazon’s total annual sales. The concessions came just a day after the commission accused Meta of violating antitrust laws by using Facebook Marketplace to promote ads and distorting outside competition.
“Today’s decision sets new rules for how Amazon does business in Europe,” said EU Competition Commissioner Margrethe Vestager. “Amazon can no longer abuse its dual role and will need to change several business practices. Competing independent retailers and shippers, as well as consumers, will benefit from these changes, which open up new opportunities and choices.”
While Amazon wasn’t thrilled with all of the commission’s findings, it seemed relieved to put the lurking investigation behind it.
“We are pleased to have addressed the European Commission’s concerns and resolved these matters,” an Amazon spokesman said in a statement. “While we continue to disagree with some of the European Commission’s preliminary conclusions, we have worked constructively to ensure that we can continue to serve customers across Europe and support the 225,000 European small and medium-sized businesses that sell through our stores.”
The no-fine decision is likely welcome news for Amazon, which is still suffering the shock of a $1.3 billion fine handed down by Italian regulators last year. In that case, regulators alleged that Amazon granted special benefits to certain third-party merchants who agreed to use Amazon’s Fulfillment by Amazon warehousing and delivery system. As part of this anti-competitive partnership, Italian regulators claimed, Amazon would grant these select retailers access to Amazon Prime customers and certain sales events, such as Prime Day.
Over in the UK, Amazon is also facing a potential $1 billion class action lawsuit accusing the company of using its Buy Box space to additionally drive customers to its own private label items. Similarly, that lawsuit alleges Amazon uses a “mysterious and self-serving” algorithm to further prioritize its own house brands.
In the US, Amazon has so far managed to avoid the same large federal lawsuits recently filed against rival tech giants like Microsoft and Meta. Still, a Bloomberg report earlier this year claimed that the Federal Trade Commission was deepening its investigation into Amazon’s recent multi-billion dollar acquisitions. Amazon’s alleged self-preference practices are regularly cited by US lawmakers still trying to pass meaningful antitrust legislation in Congress.
