December 2022 will be remembered as a time of major change in how Amazon operates its business practices in Europe. The European Commission and Amazon have settled two antitrust lawsuits marking the end of competition investigations across Europe. This new deal means customers will have more visible choices when purchasing products on Amazon. For Prime members, this new deal also means they have more shipping options.
The antitrust commitment is provided by Amazon, and after some teeter-totter back and forth seeing some adjustments made by the EU Commission and one of the biggest changes in EU antitrust rules. Agreed. Key commitments identify Commission conflicts regarding Amazon’s use of private marketplace seller data.
There are growing concerns about potential bias in granting merchants access to the platform’s Prime and Buy Box programs leading to this new deal.
EU Commission Concerns: What Are They?
The EU Commission (EC), made up of 27 members, one from each EU Member State, is the executive body/subsidiary of the European Union (EU). Responsible for implementing various decisions, drafting legislation and managing day-to-day operations across the EU.
The EC has a wide range of responsibilities, including promoting the interests of the EU and its citizens, managing the EU budget, enforcing EU law and competition rules, and negotiating international agreements on behalf of the EU. It also plays an important role in shaping EU policies and priorities. Therefore, it is not surprising that there have been many concerns related to these issues.
One of the main concerns was about Amazon’s use of non-public data related to marketplace sellers. The investigation he started in July 2019 and a notice of opposition was issued by the European Commission in November 2020. The study found that Amazon is dominant in the provision of its online marketplace services to third-party sellers in the French and German markets. Additionally, Amazon was shown to rely on non-public business data from marketplace sellers to adjust its platform retail decisions. This prevented fair competition on the site.
In November 2020, a second study was conducted to evaluate Amazon’s selection of Shopping Cart Box winners and the protocol that allows Amazon to offer products to sellers under the Prime program. The commission wanted to see if there were preferential treatment for sellers using the platform’s retail operations or Amazon’s shipping services and logistics.
This second investigation concluded that Amazon is abusing its position of power in the German, French, and Spanish markets to provide online marketplace services to third-party sellers.
There’s more (cue the dramatic music). Another tentative conclusion is that the Shopping Cart Box and Prime rules and standards set by Amazon favor the site’s own retail operations and marketplace sellers who rely on the platform’s shipping services and logistics. was.
As you can see, the European Commission decided it was time for action (a dramatic musical crescendo).
EU Commission and Amazon Commitments.
After these findings, Amazon felt a little embarrassed. Rather than refute the commission’s findings, Amazon decided to address its concerns head-on by proposing a series of commitments.
To address the Commission’s data use concerns, Amazon’s proposal is as follows:
- Not to use Non-Public Data related to or derived from the activities of independent sellers in the marketplace to benefit your own retail business. This commitment applies to Amazon employees and automated tools (anyone or anything that can merge data from Amazon marketplaces for retail decisions).
To address the Commission’s shopping cart box concerns, Amazon had another proposal.
- To display a second competing offer in the shopping cart box winner if another seller has a second offer that is sufficiently distinct from the first offer (i.e. price and/or shipping). Both offers offer the same information and buying experience.
- To treat all exhibitors equally when providing rankings for the purpose of selecting winners of Shopping Cart Boxes.
Also, in response to the great concerns surrounding Prime, Amazon has proposed the following commitments:
- Establish non-discriminatory criteria and terms for offers to eligible marketplace sellers and Prime.
- To enable Prime Sellers to select logistics and shipping service providers and negotiate directly with their carriers.
- Do not use information collected through Prime about third party carrier performance and terms that can be used to benefit your own logistics services.
what happened next?
The European Commission has decided to test these commitments between July 2022 and September 2022 as a sort of ‘try before you buy’ scenario. We have consulted with all interested third parties to see if they are willing to remove any competitive concerns.
Once this “testing” was complete, Amazon amended the proposed commitment as follows:
- Make competing second shopping cart box offers more prominent, such as a review system for better display. This is when the presentation does not get enough attention from the consumer.
- We provide a mechanism for independent shipping providers to contact Amazon customers directly, but subject to data protection regulations, and the opportunity to provide shipping services comparable to those provided by Amazon.
- It will increase transparency and facilitate an early flow of information about commitments and newly acquired rights to carriers and sellers, and, among other things, enable sellers to make an early transition to independent carriers.
- Strengthen carrier data protection against use by Amazon’s competing logistics services, especially for freight profile data.
- Establish a centralized grievance mechanism available to all carriers and sellers in the event of suspected violations of these commitments.
- Increase the authority of monitoring trustees by imposing additional notification requirements.
- Extends the term of contracts for Buy Box, which competes with Prime, from the originally proposed five years to seven years.
By committing to this, the EU Commission has made clear that Amazon cannot use marketplace seller data to support its own retail operations and cannot grant non-discriminatory access to Prime and Buy Box. discovered.
legally binding
Amazon is now legally bound by these commitments by the Commission.
For prime and second competing shopping cart box views, these final commitments will continue for seven years. Remaining obligations are valid for 5 years.
An independent fiduciary oversees the company to monitor these commitments and ensure Amazon adheres to each. So, Amazon, don’t cheat!
If Amazon decides to rebel (who knows what will happen in this crazy world), the company will be fined up to 10% of its annual gross sales. That’s a lot! This does not violate EU antitrust regulations. There may also be a penalty of his 5% of his daily turnover of the platform. This periodic fine is imposed for each day the company fails to comply with its new commitments.
Amazon may not agree to these stringent responsibilities, but “we are committed to ensuring that we can continue to serve our customers across Europe and support our 225,000 European small businesses. [their] shop. “
Now it remains only to see if Amazon adheres to this new contract. If not, get your popcorn ready.
