Amazon has agreed to change some business practices in the European Union as part of legally binding commitments with the bloc's executive branch. The European Commission said the deal will put antitrust investigations over how Amazon treats third-party sellers to bed for the time being. Amazon will need to abide by the commitments for between five and seven years or it could face hefty fines.
"Today’s decision sets new rules for how Amazon operates its business in Europe. Amazon can no longer abuse its dual role [as both marketplace and seller] and will have to change several business practices," Margrethe Vestager, the Commission's executive vice-president in charge of competition policy, said in a statement. "They cover the use of data, the selection of sellers in the Buy Box and the conditions of access to the Amazon Prime Program. Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice."
The deal includes several preliminary commitments Amazon made in July. Among other things, it will rank all sellers equally in the Buy Box, which displays an item from a specific seller so customers can quickly purchase it. Amazon said it will display a second Buy Box if another seller offers the product with a significantly different price and/or delivery time.
Third-party sellers in the EU will be able to offer their products through Prime without having to use Amazon's delivery or logistics services. Additionally, Amazon will not use any non-public data relating to third-party sellers to benefit its own business, including logistics or creating copycat versions of popular products.
The final deal includes some additional commitments, such as making it easier for third-party sellers to directly contact their Amazon customers so they can provide similar delivery services to those offered by Amazon. The company will also need to create a way for sellers and carriers to file complaints if they suspect it isn't complying with the commitments.
Amazon said it disagreed with some of the Commission’s preliminary conclusions. However, it told the Associated Press that, “We are pleased that we have addressed the European Commission’s concerns and resolved these matters.”
The settlement applies for five years in most cases. The Prime and second Buy Box commitments will last for seven years. The deal is legally enforceable in the European Economic Area save for Italy. That country's competition authority has imposed its own penalties on Amazon.
If EU regulators determine that Amazon isn't sticking to the terms of the deal, the Commission can fine the company up to 10 percent of its global annual revenue without having to find an infringement of antitrust rules. Based on Amazon's 2021 revenue, that fine could be as much as $47 billion. Alternatively, the EC could fine Amazon five percent of its daily turnover for every day that it doesn't comply with the terms of the deal.
EU regulators brought formal antitrust charges against Amazon in November 2020, accusing the company of abusing its dual position. The Commission opened an investigation over the use of non-public data the previous year. In a separate investigation, the EC found that Amazon "abused its dominance on the French, German and Spanish markets for the provision of online marketplace services to third-party sellers." Amazon is still facing scrutiny on these issues in the US and the UK.