Amazon and Anti-Competitive Practices Across The World
Market Dominance of Amazon Company
In the world of surveillance capitalism, it’s a fact that when you enjoy something for free, in that case, you are yourself the product for the company. Certainly, this is proved to be correct in the current time where due to over-dependence on internet, our most of the activities have catalyzed from traditional mode to online mode and therefore, the online or virtual market is flourishing resulting in big companies dominantly abusing its position. One such titan present here is Amazon which has approximately a value of $1.7 trillion1 and has time and again been accused of using its dominant position in the market.
According to some estimates, Amazon now captures 46% of online shopping, with its share growing faster than the sector as a whole.2 Moreover, Amazon’s shares trade at over 900 times diluted earnings, making it the most expensive stock in the Standard & Poor’s 500.3
Additionally, with 200 million paid prime members and over 300 million customers globally, Amazon has its traces found in 18 global marketplaces in 200+ countries and territories. This is the backdrop of how Amazon is influencing the market through its reach and further how through its humungous market size and capital it is potentially maintaining its dominance in the e-sector. Many countries have already started an investigation against this market powerhouse on grounds of anti-trust issues due to they being practicing the ideology of economic structuralism where the concentrated market structures promote anti-competitive forms of conduct and essentially Amazon is accused of this practice.
India and Its Investigation Against Amazon
Currently, India has been at the front to investigate Amazon for its anti-competititve practices. Recenly, it was brought before the public through the Reuters Special Report that came in 2019 which stated that Amazon is currently favouring big sellers on its Indian platforms and is practicing arbitrariness with the country’s small retailers by doing discrimination with them without any reasonable nexus thereby prioritizing big sellers over small sellers on its platform. In the report, it came forward that only 33 of the Amazon sellers out of 4,00,000 sellers are accounting for 33% of the entire sale made on Amazon’s website in India. Moreover, it was unearthed that Amazon has indirect stakes in two of the sellers and those sellers accounted for 45% of the platform’s sales revenue in 2019 initial months.4
Although, the report was not made a ground of investigation initially but anyhow, in the month of January, 2020, India’s watchdog that is Competition Commission of India (CCI) announced that under Section 26(1) of the Competition Act, a direction has been given to the Director-General to investigate into the allegations against Amazon following a complaint filed by an Indian trader group named as Delhi Vyapar Mahasangh. In the complaint, it was alleged that anti-competitive practices are being performed by this e-marketplace and therefore, they were accused of practices like the exclusive launch of mobile phones by the e-commerce firms, promoting preferred sellers on their websites, deep discounting, and prioritizing some seller listings over others.5
In India, Section 4 of the Competition Act of 2002 articulates the prohibition on enterprises to abuse their dominant position and as per Section 19(4), the commission can figure out that whether the enterprise enjoys the privilege of dominant position or not. The wide scope of what all amounts to a dominant position and its abuse have been engraved in the said sections. Seemingly, an investigation was therefore started by the CCI on finding merit in the complaint and it has decided to make a probe to examine as to whether Amazon has prima facie violated its dominant position or not.
The threshold to start the investigation was given but it was put on hold when the investigation was challenged before the court by Amazon. Nonetheless, the Commission has now got a clear chit to continue its investigation as the Supreme Court as well as the Karnataka High Court have decided the matter in favour of the investigation taking place. Firstly, in June, the Karnataka High Court dismissed the petition of Amazon to quash the probe stating that it is unwise to scuttle the investigation and hence it gave a free hand to commence the investigation for alleged anti-competitive practices.
On a higher note, now the Supreme Court of India in the month of August, 2021 has refused to stop the Commission probe against Amazon under Competition Act and has observed that big organizations like Amazon should themselves volunteer to go for enquiry rather than denying the same. The Supreme Court held that the enquiry must go on and has given four weeks to companies for giving reply to CCI.6 Amazon at the same time is also under Enforcement Directorate’s investigation on grounds of violating some of the foreign investment rules. Therefore, India has now dedicated its watchdog to find that whether Amazon is really abusing its dominant position, and if the report has been made preliminary findings against the enterprise, there can be a series of legal prosecutions which might take place against Amazon in India.
Investigation in Other Countries
The European Commission has commenced an anti-trust investigation against Amazon to scrutinize whether Amazon’s act of using sensitive data made available to them from independents retailers who sell on its marketplace is in contravention to EU Competition rules. The preliminary finding of the Commission opines that Amazon appears to use competitively sensitive information about marketplace sellers. In Europe, Article 102 of the Treaty on the Functioning of the European Union prohibits the abuse of dominant position by one or more undertakings within the internal market or in a substantial part of it, as incompatible with the internal market in so far as it may affect trade between EU member states.7 The implementation of these provisions is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can also be applied by the national competition authorities. The Commission is also investigating the preferential treatment of Amazon’s own retail business and those that has used its logistics and delivery services (known as “fulfilment by Amazon” sellers) over other sellers.8
Similarly, Amazon has been sued by the attorney general of Washington, the United States for allegedly engaging in anti-competitive practices that have raised prices for consumers. In the complaint, Amazon has been accused of increasing its dominant stronghold on the market and illegally reducing the ability of other platforms to compete for market share. Even the attorney general of District Columbia has also sued Amazon over claims that the company is violating the norms and is using its dominant position to crush the competition.9 Further, the U.S. House Antitust sub-committee has also found that Amazon has monopoly power over most third-party sellers and many of its suppliers and therefore the committee has proposed to bring reforms in the law by introducing structural separations to prohibit platforms from operating in lines of business that depend on or interoperate with the platform.”10 Therefore, other countries have also apprehended the involvement of Amazon in anti-trust practices.
Certainly, the market dominance by big enterprises has a significant impact on small-scale sellers and local marketplaces. With a high grip on technology and huge capital, these enterprises tend to suppress their competition either by purchasing them out or forcing them to exit. The abuse of the dominant position has resulted in monopolization where even the sellers, as well as the consumers, have to face the loss and only the enterprises are in a better position as they are earning profits. There is a need for the watchdogs of respective nations to examine, scrutinize and penalize such dominant practices. Moreover, stronger rules and regulations should be drafted by the legislature so that these enterprises do not find loopholes in these laws. The framework has to be stringent and the complaint redressal forum should be active so that complaints can be easily registered. Also, the judiciary of the state has to uphold the constitutional values mandating that money power does not discriminate between the rich business entities and small business holders as it would lead to the practice of arbitrariness that is a sworn enemy of equality. Thus, every nation has to ensure that a strong message should be given showing that such market practices will not be accepted and will be observed as an economic offense to the people of the state.