Amazon Reaches Deal With EU Regulators On Buy Box & Prime Concerns
Amazon's Second Buy Box as required by this settlement has been spotted in the while and raises an interesting question - will it replace the "Other Sellers Amazon" section that previously displayed multople other sellers in favor of a single seller in the alternate Buy Box?
Amazon has agreed to make changes to its Buy Box and Prime programs in Europe to settle regulator's antitrust concerns.
The European Commission opened the investigation in 2019:
In July 2019, the Commission opened a formal investigation into Amazon's use of non-public data of its marketplace sellers. On 10 November 2020, the Commission adopted a Statement of Objections in which it preliminarily found Amazon dominant on the French and German markets, for the provision of online marketplace services to third-party sellers. It also found that that Amazon's reliance on marketplace sellers' non-public business data to calibrate its retail decisions, distorted fair competition on its platform and prevented effective competition.
In parallel, on 10 November 2020, the Commission opened a second investigation to assess whether the criteria that Amazon sets to select the winner of the Buy Box and to enable sellers to offer products under its Prime Programme, lead to preferential treatment of Amazon's retail business or of the sellers that use Amazon's logistics and delivery services.
In the second investigation, the Commission preliminarily concluded that Amazon abused its dominance on the French, German and Spanish markets for the provision of online marketplace services to third-party sellers.
It also preliminarily concluded that Amazon's rules and criteria for the Buy Box and Prime unduly favour its own retail business, as well as marketplace sellers that use Amazon's logistics and delivery services.
To address the Commission's concerns, Amazon proposes the following commitments:
- not to use non-public data relating to, or derived from, the independent sellers' activities on its marketplace, for its retail business. This applies to both Amazon's automated tools and employees that could cross-use the data from Amazon Marketplace, for retail decisions;
- not to use such data for the purposes of selling branded goods as well as its private label products.
- treat all sellers equally when ranking the offers for the purposes of the selection of the Buy Box winner;
- display a second competing offer to the Buy Box winner if there is a second offer from a different seller that is sufficiently differentiated from the first one on price and/or delivery. Both offers will display the same descriptive information and provide the same purchasing experience.
- set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime;
- allow Prime sellers to freely choose any carrier for their logistics and delivery services and negotiate terms directly with the carrier of their choice;
- not use any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services.
From July 14 to September 9 this year, the Commission market tested the commitments and consulted interested third parties to verify whether those steps had alleviated the concerns, resulting in the following amendments:
- Improve the presentation of the second competing Buy Box offer by making it more prominent and to include a review mechanism in case the presentation is not attracting adequate consumer attention;
- Increase the transparency and early information flows to sellers and carriers about the commitments and their newly acquired rights, enabling, amongst others, early switching of sellers to independent carriers;
- Lay out the means for independent carriers to directly contact their Amazon customers, in line with data-protection rules, enabling them to provide equivalent delivery services to those offered by Amazon;
- Improve carrier data protection from use by Amazon's competing logistics services, in particular concerning cargo profile information;
- Increase the powers of the monitoring trustee by introducing further notification obligations;
- Introduce a centralised complaint mechanism, open to all sellers and carriers in case of suspected non-compliance with the commitments.
- Increase to seven years, instead of the initially proposed five years, the duration of the commitments relating to Prime and the second competing Buy Box offer.
The Commission has accepted these amendments and made the commitments legally binding, covering all Amazon's current and future marketplaces in the European Economic Area, excluding Italy for the commitments relating to the Buy Box and Prime in view of the decision of 30 November 2021 of the Italian competition authority imposing remedies on Amazon with regard to the Italian market.
The final commitments will remain in force for seven years in relation to Prime and the display of the second competing Buy Box offer, and five years for the remaining parts. An independent trustee will be in charge of monitoring the implementation and compliance with the commitments.
If Amazon were to breach the commitments, a fine of up to 10% of Amazon's total annual turnover could be imposed.
Margrethe Vestager, Executive Vice-President in charge of competition policy, said:
Today’s decision sets new rules for how Amazon operates its business in Europe. Amazon can no longer abuse its dual role and will have to change several business practices.
They cover the use of data, the selection of sellers in the Buy Box and the conditions of access to the Amazon Prime Programme. Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice.
These requirements of course only apply to Amazon's European operations and will likely not impact how the Buy Box or Prime program are implemented in the US or the rest of the world - however there is always the potential for a domino effect if regulators in other countries decide to pursue similar investigations.