Is Amazon Unfairly Copying Products? EU Quizzes Merchants

Is Amazon Unfairly Copying Products? EU Quizzes Merchants

By Natalia Drozdiak, Aoife White & Spencer Soper September 27 2018, 10:58 AM

(Bloomberg) -- European Union antitrust regulators are asking whether Inc. unfairly copies popular products sold by rivals on its online marketplace, according to a questionnaire sent to merchants.

In a 16-page form to be filled out by Oct. 9, regulators want to know whether Amazon has in recent years started to sell products under its own brand that are "identical or very similar" to ones merchants have offered on the company’s website and what impact that’s had on their business.

EU Competition Commissioner Margrethe Vestager last week said her department had opened a preliminary investigation into Amazon to check how the Seattle-based company gathers information on sales made by competitors on the Amazon Marketplace and whether that gives it an unfair edge when it sells to customers.

Speaking at an event in Washington on Friday, Vestager said that while "there are no accusations against Amazon at this point," she and her team have concerns about the company’s practices. She said people are asking: "is this a level playing field when they both can access all our data but they also can sell the products that we sell ourselves?"

The Commission and Amazon declined to comment on the details of the questionnaire.

Internet giants’ control of data is an increasing focus for regulators who are uncertain whether companies might breach antitrust when they harvest more and more information on how consumers behave online. The European Commission said it began the preliminary probe in large part because of responses it received during a broader e-commerce sector investigation concluded last year.

The EU in its questionnaire asked merchants to provide hard evidence such as correspondence with Amazon, and the exact date when Amazon began selling any rival product under its own brand. The EU also wants to know whether merchants use data-sharing tools, for instance for sales optimization, that may be provided by Amazon.

The questionnaire also asks how Amazon’s practices have affected merchants’ business and whether their products saw fewer or no sales after the e-commerce giant entered their market or whether the companies had to lower or raise prices as a result of the new competition.

A 2016 Bloomberg story depicted how Amazon is using insights gleaned from its vast web store to build a private-label juggernaut that includes thousands of products -- from electronics accessories, to kitchenware, bedding and more.

The company now has more than 120 private-label brands, according to TJI Research. Some, like Amazon Basics, are clearly identified as Amazon products. Others, like its clothing and furniture lines, are less obviously from the company. This explosive growth has intensified concerns of merchants who see Amazon gaining unfair advantage to compete with them.

Amazon has access to voluminous data on which shoppers purchased or browsed particular products that are similar to its own private-label brands, so it can direct its marketing to those shoppers and spend less than competitors to get customers, said James Thomson, a former Amazon executive who now advises merchants how to sell on the marketplace.

"Amazon forces you to give them your data and then uses it to compete against you," he said. "You can run the marketplace platform or you can be a seller, but you shouldn’t be able to do both."

Even though the probe could be the first steps in a process that leads to fines, Amazon shares have risen 3.7 percent since Vestager’s announcement, with a current market value of $982 billion.

©2018 Bloomberg L.P.


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