Amazon and its alleged anti-competitive practices around the world

The new era of digitalization

With the era of digitalization pumping in the world dominated by global capitalism, it was not unpredicted that the market-movers would try to cloud the developing space with their capital and size. Amazon is one such grand titan that has time and again severely violated the free-market digital space and has tried to turn the tables in their favour. Now, Amazon is not only a retailer but a marketing platform, a delivery, and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space.¹ A look at statistics can show the grandness of Amazon in this globalized online world. In the United States, Amazon is the king of online shopping and accounts for 40% of Americans’ e-commerce spending.² This figure is followed by 31.2% in India³, 30% in UK, 10% in Europe ⁴ , and having a significant hold in Brazil, Mexico, Turkey, and Australia.  Although this sheerness of Amazon’s dominance in the e-commerce market is given credit for its strategic market policies made for sellers and buyers, however, at the same time, Amazon has also been substantially accused of its anti-competitive practices resulting in changing the wind of market force in its benefit. Different countries and their respective watchdogs are now playing an important role in curbing, punishing, and fining such practices of Amazon in order to ensure unbiased market sentiments.

Amazon’s anti-competitive practices in Italy

Italy has accused Amazon Italy of using its dominant position in e-commerce for changing the fundamentals of the Italian market. While imposing the fine of $1.3 billion, the Italian antitrust watchdog Autorità Garante della Concorrenza e del Mercato or AGCM has alleged that Amazon is trying to lure the Italian sellers to use their logistics services i.e. Fulfilment by Amazon (FBA), and resultantly harmed the competition of other logistic operators providing comparable services.⁵ 

Although, luring is a normal market practice but when such practice results in harming the competitive sentiments of the market, then such issue comes under the purview of anti-competitive practices. The same was done by Amazon in Italy where Amazon in order to promote its logistics services tried to influence the sellers for using its logistics services by providing sellers with beneficial services if they get their logistics signed up with them. Such services include sellers getting the opportunity to mark their goods with the Prime fulfillment label and participate in Amazon events like its Black Friday, Prime Day, and Cyber Monday sales.⁶

These services which are provided as bait to the sellers are crucially the reason behind the success of sellers’ business and continuous increase in their sales when compared to other sellers who do not get the benefit from these services.  Thus, these services are not provided to those sellers who do not take their logistic services causing harm in logistic competition as well as in seller competition.

Italy through its antitrust regulator has also fined Amazon.com for $77 million in regard to disrupting the market of Apple and Beat products by limiting its supply by conspiring with Apple⁷. The investigation agency has mentioned that Beats is a brand that was bought by Apple in 2014. Later in 2018, there was a contract between Amazon and Apple where it was decided that only selected resellers were allowed to sell Apple and Beats products on Amazon.it. Further, the agreement also restricted cross-border sales. As a result of these restrictions provided in the agreement level of discounts offered by third parties on Amazon.it has severely affected as the size of the same has decreased. The agency has stated that such agreement is in violation of the European Union Rules and therefore directions were given to end the restrictions to give retailers of genuine Apple and Beats products access to Amazon.it in a non-discriminatory manner and thus, a fine was also imposed in lieu of the same.

Amazon breaching the privacy in European Union

European Union through its Luxembourg data protection authority has imposed its biggest ever fine to the tune of 746 million euro ($888 million) on Amazon for violating the privacy laws and data protection rules⁸ . It is certain that after the formulation of the GDPR  in 2018, European Union has got sharp teeth to curb anti-privacy practices as now they have significant powers to take action against the violators. The law allows watchdogs to levy fines of as much as 4% of a company’s annual global sales.¹³The fine was imposed as a result of an investigation made on a complaint filed by French privacy rights group La Quadrature du Net. Such a complaint was filed as a collective complaint having more than 10,000 people. In the complaint, it was alleged that Amazon had manipulated customers’ data to show what advertising and information they receive. The watchdog found merit in the complaint and held that the advertising targeting system imposed by Amazon is carried out without free consent and is thus in violation of the GDPR because of its non-compliance⁹. At present, Amazon has appealed against the same order imposing a fine on them.¹⁰

India showing no mercy for Amazon’s act for the suppression of facts

Amazon has not got mercy even in India where the India competition watchdog that is Competition Commission of India has imposed a huge penalty of around Rs. 200 crores ($27 million) for playing a foul hand in a deal that was signed between Amazon and Indian conglomerate Future Group¹¹. The deal is related to Amazon’s Rs. 1500 Crore investment in Future Group in 2019 with the adventurism of blocking the latter’s attempt to sell retail assets to Reliance Industries for $3.4 billion. In 2019, Amazon had agreed to buy a 49% stake in Future Coupons, which in turn owns a 7.3% stake in listed company Future Retail¹². At that time, the CCI has given its consent to the deal however with the caveat that in case of any misrepresentation or false information, the approval would stand revoked.

On the same account, CCI has now after its investigation revoked the consent for the deal stating that Amazon had “suppressed the actual scope” of the deal and had made “false and incorrect statements” while seeking approvals, and therefore, imposed such fine. CCI has stated that the consent given earlier will remain in abeyance till the time the whole combination deal is examined afresh.

Conclusion

In all the cases mentioned above, Amazon has denied any mal-practices and has stated that it shall file an appeal certainly. However, it is not new that any such giant has been accused of using its dominant position in the market to bring more business. Such practices have become a common scenario. Nonetheless, the watchdogs of every nation have to be at their toes to make certain that these types of anti-competitive practices should be reduced and eliminated. Consumer welfare should be prioritized and antitrust activities have to be dealt with a strict approach.

At the same time, the government should focus more on curbing any policy loopholes that may be used by these giants for their unfair business practices changing the whole dynamics. Genuine concerns of the small sellers should be considered diligently and an approach of finding speedy resolutions must be ensured. Nevertheless, the real onus lies on these giants themselves to understand the non-equilibrium actions caused in the marketplace and should restrict themselves from taking such an approach just in order to gain more profits. Liberty when performed without responsibility and authority has the potential of becoming evil.