Amazon will implement major business changes in order to stop European competition probes. This includes giving Prime members more options for purchasing products, and providing customers with more visibility.
Amazon’s legally binding promises to end two antitrust investigations were accepted by the EU’s executive Commission. This allowed the company to avoid an E.U. antitrust court battle that could have resulted in fines up to 10%.
This agreement is another step forward by EU authorities in their clampdown on Big Tech companies. It comes only days after Meta, a Facebook parent was accused of causing distortions to competition in the classified ads industry. Google has been hit by billions of dollars from the 27 member bloc, and Apple is under investigation. The EU will also enact broad regulations to prevent digital gatekeepers dominating online markets.
Margrethe Vestager, EU competition commissioner, stated that today’s decision will set the rules Amazon must play by instead of Amazon setting the rules. This was in response to a Brussels press conference. These new rules will give European consumers, independent retailers and carriers, more options and greater choice.
This agreement will only apply to Amazon’s European business practices and it will be in effect for seven years. Amazon must make these changes before June.
Amazon stated in prepared statements that “we are happy that we have addressed European Commission’s concerns” and that they had resolved the issues. However, it expressed dissatisfaction with certain preliminary conclusions of the Commission.
Amazon offered concessions to settle the investigations in July. After the initial proposal was tested by the commission, it improved them and got feedback from academics, consumer groups and book publishers.
Company promised that it would give rival products equal visibility in “buy box”, a premium section of web real estate which leads to greater sales.
European customers can get another buy box under the first for the exact same product with a different delivery or price.
Vestager stated that Amazon can’t populate the Buy Boxes both with its own offers. This will make independent sellers more visible. The performance of the second box will be monitored by regulators.
John E. Lopatka is an antitrust scholar at Penn State University and a law professor. He said that the terms of the agreement represent a substantial change in Amazon’s business. This could be a precedent for U.S antitrust regulators.
Lopatka stated that the EU’s member countries are an important – and growing market for Amazon. It’s difficult for Amazon to claim that they can’t do it here, when the same thing is happening in Europe.
Amazon will also make it easier for couriers and merchants to access its Prime membership. Amazon will no longer discriminate against Prime sellers who don’t use its logistics or delivery services. Prime members will be able to choose from any delivery option. Amazon currently allows couriers to deliver Prime parcels only if they are approved.
It also promised to cease using non-public data from independent sellers to give insights into how they can compete with those merchants via its own sales of “private label” or branded products.
Vestager stated that they will be taking the same risks on the platform as everybody else because they can’t rely on all the data.
Vestager stated that Amazon relies on the data for deciding what products and prices to launch or which suppliers to use, as well as how to manage inventory. Vestager stated that Amazon has made a commitment to cease using seller data for sales, revenue, transactions prices, performance and customer visits.
Monique Goyens is the Director General of European Consumer Group BEUC. She stated that the settlement gives consumers more options when shopping on Amazon.
Goyens stated that “consumers will not feel the benefits of the remedies” unless the Commission “ensures that they’re applied in practice.” He added that regulators must “closely watch Amazon’s compliance and demand improvements as necessary.
Others believe that the agreement doesn’t go far enough. Stacy Mitchell is an Amazon critic, and the co-director of the Institute for Local Self-Reliance. She said that the settlement’s provisions were too weak. This allows Amazon to police itself, leaving the company plenty of freedom to abuse sellers and block competition.
Amazon is under similar scrutiny in Britain and the U.S.
The office of California Attorney General Rob Bonta sued Amazon in September. They accused the company, among other things, for stifling competition, and raising prices across the marketplace. According to his office, Amazon prevented third-party suppliers and wholesale sellers from selling lower products elsewhere by imposing contract terms that would make it difficult for other companies to compete.
According to the company, an item is considered competitively priced if it’s sold at or lower than the price offered by other retailers. This can lead to higher prices elsewhere. The lawsuit stated that while some vendors may pay less to sell on Amazon, they are not allowed to lower their prices elsewhere. This is because they fear losing valuable Amazon property or being suspended.
California accuses Amazon of violating state antitrust laws and unfair competition laws. Legislators on Capitol Hill are pushing for bipartisan antitrust legislation to control Big Tech companies. However, hopes have dimmed due to intense opposition from the tech sector.