Amazon is making major trade changes in the EU settlement

EU regulators said on Tuesday that Amazon will make significant changes to its business practices to end competition investigations in Europe by giving customers clearer choices when buying products and, for Prime members, more delivery options.

The EU’s executive committee accepted legally binding commitments from Amazon to resolve two antitrust investigations, allowing the company to avoid a legal battle with the EU’s top antitrust watchdog that could have ended in fines of up to 10% of annual revenue worldwide.

The agreement represents another advance by EU authorities as they clamp down on the power of big tech companies, and comes just a day after the commission accused Facebook parent Meta of distorting competition in the classifieds space. The 27-member bloc has hit Google with billions of dollars in fines, opened investigations into Apple and is set to enact sweeping regulations by 2024 aimed at preventing so-called digital gatekeepers from dominating online markets.

“Today’s decision sets out the rules that Amazon will need to play by in the future rather than Amazon defining those rules for all players on its platform,” EU Competition Commissioner Margrethe Vestager told a news conference in Brussels. “With these new rules, competing independent retailers, carriers and European customers will have more opportunities and more choice.”

The agreement applies only to Amazon’s business practices in Europe and will last for seven years. Amazon will have to make the changes by June.

“We are pleased to have addressed the European Commission’s concerns and resolved these matters,” Amazon said in a prepared statement, adding that it still disagreed with some of the Commission’s initial conclusions.

Amazon offered concessions in July to solve the two investigations. I refined these initial proposals after the committee tested them and received feedback from consumer groups, delivery companies, book publishers, and academics.

The company promises to give products from competing sellers equal visibility in the Buy Box, an excellent piece of website real estate that drives sales.

European customers will receive a second purchase box below the first for the same product, but at a different price or delivery offer.

“Since Amazon can’t populate all of its Buy Boxes with its retail offerings, this will give more visibility to independent sellers,” said Vestager. The regulators will monitor how the second fund performs.

John E. Lopatka, an antitrust scholar and law professor at Penn State University, said the terms of the deal represented a significant change for Amazon’s business and could set a precedent for antitrust regulators in the United States.

“Countries in the European Union are an important — and growing — market for Amazon,” said Lopatka. “It’s hard for Amazon to say ‘we can’t do it here’ when they’re already doing it in Europe.”

As part of the deal, Amazon is also making its Prime membership service easier for merchants and couriers to access. It will stop discriminating against Prime sellers who do not use their own logistics and delivery services and will allow Prime members to freely choose any delivery service. Currently, carriers can only deliver Prime packages if they are approved by Amazon.

The company also pledged to stop using “non-public data” from independent sellers on its platform to provide insights into how it competes against such merchants through its own sales of branded goods or “private label” products.

“They will have to take the same risks as everyone else on the platform because they can’t rely on anyone else’s data,” Vestager said.

Vestager said Amazon uses the data to determine what kind of products to launch, prices, suppliers to choose, or how to manage inventories. She said the company has committed to stop doing so with seller data, including sales, revenue, shipments, transaction prices, performance and consumer visits.

Monique Goines, general manager of European consumer group BEUC, said the settlement allows consumers more choice when shopping on Amazon.

“However, consumers will only feel the benefits of these remedies if the Commission ensures that they are applied in practice,” Goins said, adding that regulators must “closely monitor” Amazon’s compliance with its obligations and insist on improvements if necessary.

Some believe that compromise is not enough. Stacy Mitchell, an Amazon critic and co-director of the antitrust group the Institute for Local Self-Reliance, said its provisions are too weak and allow Amazon to self-censor, “which leaves the tech company plenty of latitude to continue to abuse sellers and ban competition.”

Amazon faces similar scrutiny in the US and UK.

In September, the office of California Attorney General Rob Ponta sued Amazon, accusing the company of stifling competition and increasing product prices across the market. His office said Amazon effectively prevented third-party sellers and wholesale suppliers from offering lower prices elsewhere through contract terms that hurt other companies’ ability to compete.

The company says it considers a competitively priced item when it’s offered at or below what other retailers are offering, which could drive up prices elsewhere. Some sellers who pay more to sell on Amazon may lower their prices on other sites, the suit said, but do not do so for fear that they will lose valuable Amazon real estate or face suspension.

California accuses Amazon of violating the state’s antitrust and unfair competition laws. Lawmakers on Capitol Hill have been pressing bipartisan antitrust legislation aimed at reining in big tech, but hopes for the bill have waned amid fierce opposition from the tech industry.

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