The European Commission has announced that commitments made by Amazon, addressing its use of non-public seller data and possible bias relating to access to its Buy Box and Prime programme, are to be made legally binding under EU antitrust rules.
According to a recent press release, the Commission found 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.
It also concluded that Amazon’s rules and criteria for the Buy Box and Prime unduly favour its own retail business and marketplace sellers that use Amazon’s logistics and delivery services.
How Did Amazon Comply?
In relation to the Commission’s concerns about the online marketplaces use of non-public seller data, Amazon initially committed to:
- 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.
In relation to the Commission’s concerns about access to the Buy Box, Amazon initially committed to:
- 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.
In relation to the Commission’s concerns about access to the Prime programme, Amazon initially committed to:
- 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.
The proposed commitments were market tested, and following a period of consultation, Amazon then submitted the following amendments and committed to:
- 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 found that Amazon’s final commitments will ensure that Amazon does not use marketplace seller data for its own retail operations and that it grants non-discriminatory access to Buy Box and Prime. Accordingly, the Commission decided to make them legally binding on Amazon.
If Amazon were to breach the commitments, the Commission could impose 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.
How Will This Impact Sellers on the US and UK Marketplace?
Long story short, they won’t. These commitments will only apply to Amazon’s European operations and will not immediately impact how seller data is used or how the Buy Box or Prime programme are implemented in the US or UK markets. However, as many sellers in the US and UK will share similar concerns as their European counterparts, there is potential for change if regulators pick up on the European Commission’s lead.