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To avoid multi-million euro fine, Amazon agrees to make changes to European business strategy

After years of an antitrust investigation and negotiations with the EU, Amazon has agreed to change its strategy in the EU and give third-party sellers more access to valuable real estate on its website. One of the many commitments Amazon is committed to is to allow Prime sellers to choose any carrier for their logistics services.

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The European Commission has put an end to the antimonopoly proceedings against Amazon. The EU body and the online retail giant agreed that Amazon will have to make some significant changes to its operations in Europe.

Formal proceedings against Amazon were initiated by the European Commission in July 2019. It concerned Amazon’s use of non-public data of its sellers on the marketplace.

In November 2020, the EC sent a statement of objections to the giant in which it preliminarily concluded that Amazon dominates the French and German markets in providing online marketplace services to third-party sellers. According to Brussels, Amazon’s reliance on non-public business data of sellers in the marketplace for its own benefit, distorted fair competition on its platform, and prevented effective competition.

In parallel, in November 2020, the EC launched a second investigation into the possible preferential treatment of Amazon’s own retail offers, and offers of sellers using Amazon’s logistics and delivery services.

Firstly, 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.

And secondly, the EU body also ruled 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.

Amazon’s commitments after the deal

One of Amazon’s commitments is to stop using non-public information about independent sellers in its retail operations or to sell branded goods and private label products.

The company has also agreed to display a second purchase box when there is a second offer that differs from the first in terms of price or delivery, and to let Prime sellers choose any carrier for their logistics services.

The offered commitments cover all Amazon’s current and future marketplaces in the European Economic Area.

They exclude 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.

“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,” said Margrethe Vestager, Executive Vice-President in charge of competition policy, when the agreement was announced.

If Amazon were to breach the commitments, the Commission could impose either a fine of up to 10% of Amazon’s total annual turnover, without having to find an infringement of EU antitrust rules or a periodic penalty payment of 5% per day of Amazon’s daily turnover for every day of non-compliance.