Amazon is facing charges from the European Union‘s antitrust watchdog over its treatment of third-party sellers, according to sources.
The European Commission, the EU’s top antitrust regulator, is planning to file charges against the e-commerce giant as early as next week or the following week, sources told The Wall Street Journal.
The charges relate to allegations that Amazon has been using data from its third-party sellers to make its own similar, private-label products to compete against them.
This comes amid a two-year probe from the EU into the retail giant and following an exposé by the Journal back in April that found Amazon staff were using information from sellers to develop competing goods.
Amazon boss Jeff Bezos. Amazon is facing charges from the European Union’s antitrust watchdog over its treatment of third-party sellers, according to sources
The EU charges, called a statement of objections, will focus on Amazon’s dual role as both a seller of its own products and an operator of the marketplace, the Journal reported.
One source told the Journal the case team has been drafting the charge sheet for a number of months.
Amazon could be slapped with a fine of up to 10 percent of its annual revenue if it is found to have violated EU antitrust laws.
It would be able to appeal the fines.
The charges are a culmination of a two-year probe, after EU Competition Commissioner Margrethe Vestager launched an investigation into Amazon’s alleged mistreatment of sellers on its platform back in 2018.
Vestager questioned third-party sellers on the platform to determine whether Amazon used data from the merchants to its own advantage.
Allegations resurfaced this April, when a Journal investigation found Amazon employees had taken seller information to inform the company’s own private-label product strategy.
The charges are a culmination of a two-year probe, after EU Competition Commissioner Margrethe Vestager (pictured) launched an investigation into Amazon’s alleged mistreatment of sellers on its platform back in 2018
The investigation, which involved interviews with more than 20 former employees of its private-label business and access to internal documents, found that information was used to help Amazon decide how to price items, which features to copy, or whether to enter a product category at all.
In one case, staff said they accessed data about a popular car-trunk organizer from a third-party seller including total sales, marketing and shipping costs, and how much Amazon made on each sale, before introducing its own highly similar, competing product.
Amazon has long insisted it does not use information from its third-party sellers when making its own products.
It has denied accusations it abuses its power and said many retailers sell both their own-label goods and competitors’ goods.
Following the Journal investigation, the US House of Representatives Judiciary Committee last month called on founder Jeff Bezos to testify to the panel about the allegations.
In a letter to Bezos signed by Democratic and Republican members of the panel, the lawmakers questioned whether Amazon committed perjury by denying using third-party sellers’ data to make its own products in sworn testimony to Congress last year.
The European Commission is planning to file charges against the e-commerce giant as early as next week or the following week, sources told The Wall Street Journal. The charges relate to allegations that Amazon has been using data from its third-party sellers to make its own similar, private-label products to then compete against them
A Journal investigation in April found Amazon employees used information gleaned from a top-selling third-party vendor’s car-trunk organizer (left) to make its own competing version (right)
‘If the reporting in the Wall Street Journal article is accurate, then statements Amazon made to the committee about the company’s business practices appear to be misleading, and possibly criminally false or perjurious,’ the letter read.
At issue are statements made by Amazon’s associate general counsel, Nate Sutton, who denied under oath in July and in written testimony that Amazon carried out such practice.
The lawmakers threatened to issue a subpoena to summon Bezos if he does not attend voluntarily.
‘We expect you, as Chief Executive Officer of Amazon, to testify before the Committee,’ the letter said.
‘Although we expect that you will testify on a voluntary basis, we reserve the right to resort to compulsory process if necessary.’
Amazon said it would ‘make the appropriate executive available’, but has not provided more details over when Bezos will testify.
The company also said it was launching its own internal investigation and insisted any employees using seller information to make private-label decisions would be in violation of company policies.
Amazon’s associate general counsel, Nate Sutton, denied under oath in July and in written testimony that Amazon carried out such practice
An Amazon fulfillment center. Amazon could be slapped with a fine of up to 10 percent of its annual revenue if it is found to have violated EU antitrust law
The EU charges mark another blow for the company as it is currently addled by multiple antitrust and anticompetition probes on both sides of the pond.
In the US, Amazon is already facing antitrust probes by the Justice Department and the Federal Trade Commission, and the House Judiciary Committee is carrying out an antitrust investigation into several tech firms including the retail giant.
Meanwhile the EU is also investigating whether Amazon broke competition laws.
The European Commission has gone after several of the Silicon Valley tech giants in recent years.
Google was slapped with over $9 billion in fines for breaking competition rules in three separate investigations, and probes into alleged anti-competitive behavior are still ongoing at Google and Facebook.
Vestager is poised to roll out proposals for new regulations for tech firms later this year.