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Amazon is facing an EU-wide probe over third-party selling practices

Amazon is facing an EU-wide probe over third-party selling practices
[Photo: Mein Deal/Unsplash]

Following a tough grilling in Washington yesterday over its third-party marketplace practices, Amazon is facing scrutiny on the other side of the Atlantic for the same thing, reports Reuters. While the online retail giant just reached a settlement with Germany’s antitrust authority to overhaul its terms of service for third-party sellers, the company could still face an EU-wide probe over related issues.

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Third-party sellers in Germany, which is Amazon’s second-largest market after the U.S., have long complained that Amazon’s terms of service for selling on its marketplace were stacked against them. But as part of a deal with Germany regulators, Amazon says it will address many of those issues, including giving 30 days notice, and a reason for removing a seller from its marketplace. Previously Amazon could simply block a seller instantly and for no reason.

Sellers will also be able to now take Amazon to court in their own country, instead of only Luxembourg, where Amazon’s European arm is situated. The prior restraint meant many small sellers with limited funds didn’t have the means to take Amazon to court. Sellers will now also be able to appeal against Amazon decisions regarding whether the seller or Amazon should shoulder the cost of a refund and return.

While any EU-wide probe will focus on Amazon’s third-party marketplace, it is thought it will be looking most intently into whether Amazon uses data it gathers from third-party marketplace purchases to compete against them unfairly.

Update: Shortly after this article first appeared, the European Commission has now announced that is has launched a formal antitrust investigation “to assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules.”

The EC says its investigation will be wide-ranging but will focus on two areas of interest:

  • the standard agreements between Amazon and marketplace sellers, which allow Amazon’s retail business to analyze and use third-party seller data. In particular, the Commission will focus on whether and how the use of accumulated marketplace seller data by Amazon as a retailer affects competition.
  • the role of data in the selection of the winners of the “Buy Box” and the impact of Amazon’s potential use of competitively sensitive marketplace seller information on that selection. The “Buy Box” is displayed prominently on Amazon and allows customers to add items from a specific retailer directly into their shopping carts. Winning the “Buy Box” seems key for marketplace sellers as a vast majority of transactions are done through it.

Announcing the antitrust investigation EC commissioner Margrethe Vestager said:

European consumers are increasingly shopping online. E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate these benefits through anticompetitive behaviour. I have therefore decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.

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