Following a three-year investigation into (i) Amazon’s use of non-public data to calculate retail decisions regarding Amazon online marketplace sellers, and (ii) the company’s practices with regard to Amazon Prime services and “Buy Box” offers, the European Commission has accepted as binding several commitments proposed by Amazon.
The Investigation
In July 2019, the European Commission opened an investigation into Amazon’s use of non-public data of its marketplace sellers. The investigation resulted in a statement of objections and preliminary findings that Amazon occupied a dominant position in the French and German markets for the provision of online marketplace services to third-party sellers. The Commission also determined, as the result of a parallel investigation, that the criteria used by Amazon to select sellers under its Prime program and winners of the Amazon Buy Box led to preferential treatment of certain sellers, and constituted an abuse of dominance on the French, German and Spanish markets for the provision of online marketplace services to third-party sellers.
The Buy Box feature on Amazon’s website displays in a prominent position the sales offers of a single seller, and facilitates the sale of that seller’s products through an expedited process. The Amazon Prime program provides premium services to subscribers, and gives access to independent sellers under certain circumstances. The Commission’s investigation concluded that Amazon’s rules for the Buy Box and Prime programs favored Amazon’s own retail businesses and marketplace sellers that used Amazon’s delivery and logistics services.
Amazon’s Commitments
To address the Commission’s concerns, Amazon offered several commitments, which the Commission tested between July and September 2022, and amended in accordance with the results of those tests and public consultations. As provided by Article 9(1) of the EU Antitrust Regulation (Regulation No 1/2003), the Commission accepted the commitments as amended. The final commitments regarding Buy Box offers and Prime services will be binding on Amazon for seven years and will cover all Amazon marketplaces in the European Economic Area except Italy.* The remainder of the commitments will be binding for five years and apply throughout the European Economic Area. Salient elements of the commitments include:
- Ceasing to use non-public data relating to independent sellers’ activities to make retail decisions, and refraining from using such data to sell branded goods or Amazon’s private label products;
- Setting non-discriminatory conditions for the qualification of marketplace sellers to the Prime program;
- Increasing transparency to sellers and carriers, and enabling the switching of sellers to independent carriers;
- Adding a second competing Buy Box offer, and making it more prominent on the Amazon website, and monitoring consumer traffic in case additional enhancements are needed;
- Establishing a mechanism for independent carriers to contact Amazon customers directly and thus provide delivery services equivalent to those offered directly by Amazon;
- Increasing the powers of the monitoring trustee, and;
- Introducing a centralized complaint mechanism for all sellers and carriers.
Implementation and Potential Penalties
The commitments must be implemented within six months, by June 2023. Pursuant to the commitments, in the event of a breach by Amazon, the Commission could impose a fine equal to 10% of Amazon’s total annual turnover. In the alternative, the Commission could impose a daily penalty payment of 5% of Amazon’s annual turnover for every day of non-compliance.
In a statement issued following publication of the commitments, European Commission Executive Vice-President Margrethe Vestager emphasized the significance of the decision, noting that “today’s decision sets the rules that Amazon will need to play by in the future instead of Amazon determining these rules for all players on its platform.”
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*The Italian competition authority imposed remedies on Amazon in November 2021 covering the Buy Box and Prime features with regard to the Italian market.