Amazon.
AMZN 0.96%
com Inc. agreed to settle two European Union antitrust cases related to allegations about its treatment of third-party sellers on its platform, ending some of the bloc’s most advanced cases targeting a U.S. tech company.
The online retailer won’t pay a fine as part of the settlement, something it first proposed in July, but it will be forced for up to seven years to adhere to commitments to change certain business practices that EU regulators had alleged were harmful to third-party sellers on its platform.
As part of the deal, Amazon is committing to give third-party sellers that use Amazon an equal shot at being selected as the default option for the buttons in Amazon’s so-called Buy Box and to qualify for its Prime shipping program. The Buy Box contains the “Add to basket” and “Buy now” buttons on the Amazon website. The company will also abstain from using nonpublic data about sellers on its marketplace to compete against them.
The deal settles charges the EU leveled two years ago against Amazon for allegedly violating competition law by using nonpublic information from merchants in its competition against them. The EU since then has also been investigating potential charges related to the buy box and Prime program.
Amazon said Tuesday that it continues to disagree with several of the EU’s allegations about its business practices, but engaged in a settlement to preserve its ability to serve customers and businesses in Europe.
“Today’s decision sets the rules that Amazon will need to play by in the future, instead of Amazon determining these rules for all players on its platform,” said EU Executive Vice President
Margrethe Vestager,
who serves as the bloc’s top antitrust regulator.
Amazon’s settlement is the latest sign of how the EU is trying to position itself as a global tech regulator. The European Commission, the EU’s top competition regulator, has pursued other antitrust cases against companies including
Apple Inc.,
Alphabet Inc.’s
Google and
Meta Platforms Inc.,
alleging illegal business practices. The bloc’s national privacy regulators have also started taking more direct aim at big technology companies, under the EU’s privacy law.
The EU will soon have new powers, under a new online-competition law called the Digital Markets Act. The DMA aims to create more competition for the biggest tech companies operating in Europe, as defined in part by revenue, number of users and market capitalization. Those companies, dubbed gatekeepers, are expected to include Apple, Alphabet, Amazon and others. The DMA’s provisions will be enforced beginning in 2024.
The law, for instance, forbids gatekeepers from treating its own services and products more favorably in rankings than those from third-party providers. Earlier this month, at a panel discussion organized by the commission, an Amazon executive said that the company’s settlement offer for the bloc’s antitrust cases also meet the requirements the company will face under the DMA and show the company’s approach under that law.
Ms. Vestager on Tuesday urged companies to start work now on their compliance plans for the law.
Tuesday’s settlement tracks closely the original offer that the company made in July. The European Commission then solicited comments from the industry about those commitments, which led to a handful of sweeteners from Amazon, such as extending the term of certain provisions to seven years from five.
As part of the deal, Amazon will refrain from using the nonpublic data it gets from third-party marketplace sellers—such as sales terms, revenue and seller performance—to compete with them. The commission said the commitment would apply to Amazon’s automated tools and to its employees, and would effectively bar the company from using sellers’ data to make retail decisions.
Amazon also agreed to apply equal treatment to all sellers when deciding what to feature in its Buy Box, which promotes a single seller and allows a featured product to be quickly purchased by pressing a buy or add-to-cart button—accounting for the most of sales. The company also agreed to display a second, competing offer in addition to the main Buy-Box item, if there is a substantial difference in price or delivery terms.
The EU said Amazon sweetened this commitment to improve the visibility of the second box after the public consultation. Ms. Vestager said Tuesday that the commission could ask for further changes to make sure the second box is effective.
Additional commitments related to Amazon’s Prime program would require the company to set nondiscriminatory conditions for third-party sellers and allow them to choose any provider for their logistics and delivery services. The company won’t be able to use information it gets about third-party logistics providers through Prime for its own logistics services.
The EU will monitor Amazon’s compliance with the commitments. A breach of those promises could result in a fine of up to 10% of the company’s global revenue, without the need to show a new violation of antitrust law, the commission said.
It isn’t unusual for an EU settlement of a case involving allegations of abuse of dominance to include no fine. In 2017, the EU settled an investigation into whether Amazon had imposed illegal terms on book publishers for electronic books. Amazon agreed not to enforce certain clauses of its contracts, among other changes, but there was no fine.
Write to Sam Schechner at [email protected]
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