European Union has charged Amazon for weakening retail competition

The European Union has charged Amazon with distorting competition in online retail and opened an investigation into its dual role – as a marketplace for merchants and also a competing seller.

The EU regulators alleges that the US Company uses its size, power and data to provide an unfair advantage over the retailers who sell on its online platform.

The regulators examined at how U.S. tech giants are collecting data on rivals selling on their platform. It say that Amazon uses that sensitive information to figure out what popular products are in order to better target its own products.

The competition chief Margrethe Vestager said that by using this sensitive information, it allows Amazon to focus on sales of the best-selling products. She added that this marginalises third-party sellers and limits their growth potential.

The regulators will also investigate the how the company uses competitively sensitive merchant data to select winners of its “buy box”, which allows customers to add items from a specific retailer directly into their shopping carts.

Meanwhile Amazon disagreed with the European Union’s claims. Amazon represents less than 1% of the global retail market, and the company said it has large retailers in all the countries where they operate.

Ms. Vestager has been monitoring Amazon since July last year, when competitor merchants expressed their grievances. The EU competition enforcer said that regulators had to ensure that dual-role platforms with market power, such as Amazon, did not distort competition. However, a final EU decision could come next year.

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The European Union has imposed huge penalties on Alphabet’s Google and other firms, under Vestager’s watch.

Amazon can be fined up to 10% of its global turnover if found guilty of violating antitrust laws. However, by offering settlement concessions, a large penalty and a finding of wrongdoing can be avoided.  

The charges comes at a time when the COVID-19 pandemic has intensified Amazon’s position in the global economy, with online sales soaring in lockdowns.

The European Commission has also launched another inquiry into Amazon’s possible preferential treatment of its own retail offerings and those of marketplace sellers using Amazon’s logistics and delivery services.

The inquiry will examine Amazon’s own retail offers and the preferred treatment of marketplace sellers using Amazon’s logistics and delivery services.