Europe charges Amazon with using dominance and data to squeeze rivals

The European Union chargedAmazonwith damaging retail competition, alleging on Tuesday that the UScompany uses its size, power, and data to gain an unfair advantage over smaller merchants that sell on its online platform.

The move by competition chief Margrethe Vestager, the latest European salvo against UStech giants, comes at a time when the COVID-19 pandemic has amplifiedAmazon's role in the global economy, with online sales soaring in lockdowns.

The European Commission has been investigatingAmazon's position as both a marketplace for merchants and a rival seller, while the firm also faces scrutiny in the United States over its alleged mistreatment of sellers, as well as its dual role.

The EU regulator looked into howAmazoncollects data on competitors that sell on its platform, offering everything from electronics and toys to food and kitchenware. It says thatAmazonuses that sensitive information, which shows what is proving popular or not, to better target its own products.

"The use of these data allowsAmazonto focus on the sale of the best-selling products and it marginalises third-party sellers and caps their ability to grow," European Competition Commissioner Vestager told a news conference.

Vestager, who has a reputation of being one of the world's toughest antitrust enforcers, said that regulators had to ensure that dual-role platforms with market power, such asAmazon, did not distort competition.

Amazondisagreed with the EU assertions.

"Amazonrepresents less than 1% of the global retail market, and there are larger retailers in every country in which we operate," the company said.

A USCongressional antitrust report earlier this year into the alleged abuse of market power byAmazonalso raised the concerns highlighted by the EU and is likely to influence the case USregulators bring against the company.

USRepresentative David Cicilline, a Democrat and the top antitrust lawmaker in the House, applauded the EU and urged the U.S. Federal Trade Commission to take similar action.

"As we found as part of a 16-month bipartisan investigation,Amazonhas monopoly power over sellers on its platform," Cicilline said.

The EU charges are the latest example of how watchdogs around the world, led by Europe, are grappling with the challenges of regulating Big Tech, companies that have achieved dominance in their fields and vast troves of user data.

On Vestager's watch, the EU has imposed large fines on the Alphabet's Google and other companies. See FACTBOX:

A final EU decision could come next year.Amazonfaces being fined up to 10% of its global turnover if found guilty of breaching antitrust rules. However, it can avoid a hefty penalty and a finding of wrongdoing by offering concessions to settle.

NEW INVESTIGATION

The EU competition enforcer has been investigatingAmazonsince July last year after rival traders voiced their grievances. The regulator said the charges related toAmazon's activities in France and Germany, its two biggest markets in Europe and where it is the dominant player.

The case focuses on its use of merchant data on its platform. Vestager said her officials had trawled 80 million transactions and reviewed 100 million products onAmazon's platform to put the case together.

The European Commission also opened a new investigation intoAmazonon Tuesday, over the possible preferential treatment of its own retail offers and those of marketplace sellers that useAmazon's logistics and delivery services.

That probe will look into the possible preferential treatment ofAmazon's own retail offers and those of marketplace sellers that useAmazon's logistics and delivery services.

Regulators will investigate the criteria the company uses to select winners of its "buy box", which allows customers to add items from a specific retailer directly into their shopping carts.

"Its rules should not artificially favourAmazon's own retail offers or advantage the offers of retailers usingAmazon's logistics and delivery services," Vestager said, citing the importance of e-commerce, an area which has gained importance with the COVID-19 pandemic.