The logo of Amazon is seen at the company logistics centre in Boves, France. File picture: Reuters/Pascal Rossignol
The logo of Amazon is seen at the company logistics centre in Boves, France. File picture: Reuters/Pascal Rossignol

Amazon accused of unfair business practices as EU hits firm with antitrust charges

By The Washington Post Time of article published Nov 11, 2020

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By Michael Birnbaum, Jay Greene

The European Union's antitrust chief announced charges against Amazon on Tuesday, alleging that the online giant misuses the data it gathers from other sellers on its platform.

The charge was the latest European move against U.S. tech giants, which in recent years have often run into more aggressive regulation from E.U. enforcers than from those in the United States. E.U. antitrust regulator Margrethe Vestager alleged that Amazon uses the vast pool of information it gathers from its marketplace platform to identify popular products being sold by outside vendors on its website, then offers similar products itself, sometimes at lower prices.

The charges are similar to allegations Amazon faces from U.S. trustbusters, though American regulators have not yet brought charges against the e-commerce giant. Amazon chief executive Jeff Bezos told a House subcommittee in July he couldn't confirm that the company didn't use data it collects regarding sales of products in its marketplace to launch its own private-label goods. The company later sent a letter to lawmakers saying it found no violations of internal policies that preclude the practice. (Bezos also owns The Washington Post.)

Vestager, a former Danish economy minister, has made aggressive policing of companies including Amazon, Facebook, Google and Apple a theme of her tenure. Her allegations came a day after E.U. ministers approved $4 billion in tariffs on U.S. products, an unrelated decision that nevertheless suggested that nearly four years of angry trade relations under President Trump are unlikely to end overnight with the election of Joe Biden as president, even if he has offered a more conciliatory approach than the current occupant of the Oval Office.

"Amazon illegally distorted competition in online retail markets," Vestager told reporters. "This is a case about big data."

She added: "We do not take issue with the success of Amazon or its size. Our concern is very specific business conducts which appear to distort genuine competition."

Amazon will have the chance to answer the charges in the coming weeks, Vestager said. The preliminary accusations are the next stage of an investigation into Amazon's trade practices that Vestager announced in July 2019.

"We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts," the company said in a statement. "Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate."

Tuesday's charges focus on Amazon's trade practices in France and Germany. In France, 70% of online consumers bought something from the company in the last year, and 80% of consumers in Germany had done so, Vestager said. Amazon is a major player in most E.U. countries, but its market share does not always meet the bar for heightened legal scrutiny.

She said the alleged abuse resulted from Amazon's mixing of its role as a retailer that sells products directly to customers and its role as a platform for other retailers to sell merchandise. The company takes data from the 800,000 sellers on its European websites to make decisions about what products it should sell itself.

"The use of these data allows Amazon to focus on the sale of the best-selling products, and this marginalizes third-party sellers and caps their ability to grow," she said.

A decision is expected next year. If Amazon is found to have broken E.U. laws, it could be forced to change its business practices in Europe and could also be fined up to 10% of its annual global revenue, or $28 billion based on 2019 numbers. But such cases can drag on for years of appeals, and they can also be dropped.

Vestager also announced an ongoing investigation into whether Amazon unfairly defaults to products sold by vendors that use Amazon's warehouse and shipping services. The probe looks at whether the company illegally prioritizes those products in its "buy box," the featured spot on the right side of an Amazon page that its customers typically use to purchase an item.

European regulators have been particularly aggressive in targeting Amazon's tactics with third-party sellers. In July 2019, the Bundeskartellamt, the German competition agency, announced Amazon agreed to implement changes in the way it deals with those sellers after an eight-month investigation into the company. The settlement requires Amazon to offer third-party sellers 30 days notice before suspending their accounts. The agency said the deal also "significantly reduced" restrictions sellers faced with regard to making public statements about their business relations with Amazon, something that had required Amazon's prior written approval.

Vestager has been in office for six years, a stretch during which she has pursued U.S. tech giants for their trade practices, often more aggressively than her U.S. counterparts. The companies at times have complained that they were being targeted simply because they were American. Vestager has said they were targeted because they were abusing their market power, not because they were American.

The result has been that Europe has sometimes functioned as the lead regulator for U.S. tech companies, since the market power of its 448 million residents also shapes business practices beyond European borders. The European Commission, the executive arm of the European Union, plans to announce sweeping proposals for regulation of the digital economy next month.

But Vestager's track record on enforcement has been mixed. A $15 billion back-tax case against Apple was overturned by an E.U. court in July, and Vestager is appealing. Other cases against Google are still winding through courts.

U.S. regulators have also grown more aggressive in recent years, filing antitrust charges against Google last month over its search practices. That more skeptical attitude toward the power of big tech companies is expected to continue under Biden.

And U.S. lawmakers have stepped up oversight of Amazon, as well. Three months after the July tech hearing, congressional investigators accused the company, along with Apple, Facebook and Google, of engaging in anti-competitive, monopoly-style tactics, calling for sweeping changes to federal laws so that government regulators can rein in the power of tech giants. Specifically, the congressional report recommends a significant overhaul of the federal government's antitrust powers, including making it illegal for a company such as Amazon to give their own products advantages in their online marketplaces. Amazon defended its practices in a blog post at the time and called the economic theories behind the House investigators' proposals "fringe notions."

The Washington Post

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