Amazon charged with abusing EU competition rules

Amazon has been charged by the European commission with using the sales data of independent retailers selling through its site to illegally gain an advantage in the European marketplace.

The US tech firm and online retailer was accused by Brussels of using the information it collects on retailers to focus its own efforts on the bestselling products with the biggest profit margins.

Margrethe Vestager, the commission’s vice-president, said the commission’s preliminary conclusion was that Amazon used “big data” to illegally distort competition in France and Germany, the biggest online retail markets in Europe.

Brussels has also decided to open a second investigation into Amazon’s e-commerce business practices over concerns that the Seattle-based company set rules on its platform to benefit its own offers and those independent retailers using its logistics and delivery services.

Last month, Amazon announced a third quarter income for 2020 of $6.3bn, triple that of the previous year, as an increasing number of shoppers turn to online sales amid the pandemic.

Vestager told a press conference in Brussels that the commission did not have an issue with the size of the company but only with its business practices which appeared to illegally stymy the growth of its competitors.

“We all know how important e-commerce is today and the current crisis has demonstrated even further that buying online is now commonplace for many, many people, people shop online more frequently and for an increasing variety of products,” Vestager said. “The value of online sales in Europe has been growing steadily. And it has almost doubled in the last five years, reaching almost €720bn this year, up from more than €370bn in 2015.

“And Amazon is at the centre of this market development. More than 70% of consumers in France, and more than 80% of consumers in Germany, that made online purchases bought something from Amazon in the last 12 months. We do not take issue with the success of Amazon or its size. Our concern is very specific business contacts which appears to distort genuine competition.”

Amazon has been under investigation since July during which officials analysed a data sample covering more than 18m transactions and more than 100m products.

The commission found that real time business data relating to independent retailers on the site was being fed into an algorithm used by Amazon’s own retail business.

“It is based on these algorithms that Amazon decides what new products to launch, the price of each individual offer, the management of inventories and the choice of the best supplier for a product,” Vestager said. “We therefore come to the preliminary conclusion that the use of this data allows Amazon to focus on the sale of the best selling products, and this marginalises third party sellers and caps their ability to grow.”

The company has been sent a formal statement of objection to which it has the opportunity to respond. In a statement Amazon said it disagreed with the findings. “There are more than 150,000 European businesses selling through our stores that generate tens of billions of euros in revenues annually,” the company said.

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