Canadian and German regulators are looking into possible investigations into Amazon. The concern is that Amazon might be abusing its market dominance.
When COVID-19 hit, governments around the world began locking down their respective economies. Businesses shut down and everyone was forced to stay home. The move is, of course, logical. Scientists and health experts studied the behavior of the disease and found that this is the best thing to do to slow transmission. In the absence of a vaccine, this is the best thing citizens can do at this time.
Of course, there is one problem: what can people do in the absence of going to work or shopping? Well, many governments started handing out emergency relief funding so people don’t simply starve to death. People are permitted to get basic necessities. So, people aren’t exactly starving to death. The problem then becomes how people do have spare time and money, but nowhere to spend it. As we pointed out back in April, people turned to the Internet. The very thing that traditional media routinely lambasted for being a bastion of scams, false information, and encouragement of bad behavior. Suddenly, this Internet thing became a new haven for people with money and time as they faced self-isolation.
One of the things a lot of people did is start shopping online. With all non-essential businesses shut down, what is someone to do if they want to buy something deemed “non-essential”? Well, thanks to the wonders of the Internet, online stores stayed open. One of the largest retail stores out there is, of course, Amazon. So, people began shopping there and ordering whatever they want online. For businesses, Amazon became a critical tool to connect to shoppers and continue selling things. It wound up being the perfect way to get around social distancing rules and full-on lockdowns.
While it seemed like a match made in heaven (retailers and Amazon), regulators are seeing something different: anti-competitive behavior. Canadian regulators began a probe into the relationship between Amazon and businesses and whether or not the online retail store was abusing its market dominance to squeeze retailers for cash. From the CBC:
Canada’s Competition Bureau has launched an investigation into online selling powerhouse Amazon.ca to examine whether the website’s U.S. owners are “impacting competition to the detriment of consumers and companies that do business in Canada.”
The competition watchdog said in a release Friday that while its probe is ongoing and stressed that “there is no conclusion of wrongdoing at this time,” the bureau is looking into whether or not the site may be engaging in anti-competitive practices, including:
- Any past or existing Amazon policies that may impact third-party sellers’ willingness to offer their products for sale at a lower price on other retail channels, such as their own websites or other online marketplaces;
- The ability of third-party sellers to succeed on Amazon’s marketplace without using its “Fulfilment By Amazon” service or advertising on Amazon.ca.
- Any efforts or strategies by Amazon that may influence consumers to purchase products it offers for sale over those offered by competing sellers.
While Amazon sells millions of items itself, it also acts as a conduit for sales of products from other businesses that Amazon doesn’t have in stock, in exchange for a cut of every sale in the process.
While they are saying there is no evidence of wrongdoing, it seems that regulators are taking a look anyway in Canada. Generally, this might be seen as little more than a curious development. However, Canadian regulators aren’t the only ones looking into this possibility. German regulators are also asking similar questions about competition. From Reuters:
Germany’s anti-trust authority has launched an investigation into Amazon’s relationship with third-party traders selling on its site, its head was quoted as saying on Sunday.
“We are currently investigating whether and how Amazon influences how traders set prices on the market-place,” Andreas Mundt, President of the Federal Cartel Office, told the Frankfurter Allgemeine Zeitung daily.
Germany is Amazon’s second-biggest market after the United States.
During the first few months of the COVID-19 pandemic, when many stores were closed and shoppers flocked online, Mundt said there had been complaints that Amazon had blocked some traders because of allegedly overly high prices.
“Amazon must not be a controller of prices,” he said, adding that Amazon had responded to his office’s requests for information and those statements were being evaluated.
An Amazon spokeswoman said the company’s policies were designed to make sure its partners set competitive prices.
“Amazon selling partners set their own product prices in our store,” the spokeswoman said. “Our systems are designed to take action against price gouging,” she said, adding that those who had concerns should contact its support team for its merchants.
If anything, this shows that regulators in some countries are taking a keen eye on Amazon and its spectacular position it suddenly found itself in. Because of Amazon’s digital presence in a global pandemic, the online store suddenly found itself in a position of being a great way to keep some businesses open. It’s an incredible shift in the market. Yet, suddenly, it has suddenly gone from an entity that helped kept some businesses afloat to seeing possible storm clouds from regulators looming. Who knows if this is an issue that will simply pass by or work itself into being something more serious. It really depends on what regulators find in Amazon’s methods of conducting business.
Drew Wilson on Twitter: @icecube85 and Facebook.
