Investigation into possible anti-competitive behaviour is likely to spark US anger

The European Union has launched a formal investigation into Amazon, opening a new front against the US tech giants.

Announcing the decision, the European commissioner for competition, Margrethe Vestager, said she wanted to take “a very close look” at whether Amazon’s business practices broke EU antitrust rules.

The investigation into another US company seems bound to provoke the ire of the White House, only weeks after Donald Trump said Vestager “hates the United States perhaps worse than any other person I’ve ever met”.

The Danish commissioner, who is due to become one of two first vice-presidents at the commission this autumn, has won international recognition for her tough action on US tech companies such as Google and Apple when Brussels investigations found either an abuse of market power or underpayment of corporate taxes. The commission has always insisted that its actions are targeting anti-competitive behaviour rather than singling out companies by nationality.

Quick guide EU takes on big tech Show Hide - Google faced two massive EU fines for abusing market dominance in barely one year. A record-breaking €2.42bn (£2.2bn) penalty in June 2017 for tilting the market against rivals in the internet shopping business, was overtaken by a €4.34bn fine in 2018, over search engines on its Android mobile phone operating system. Google is appealing both decisions. Apple was ordered to pay a record-breaking €13bn in back taxes to Ireland, after EU regulators ruled that a sweetheart deal between the company and Irish tax authorities was illegal state aid. In 2014, the tech firm paid tax at just 0.005%, while the usual rate of corporation tax in Ireland is 12.5%. Facebook was fined €110m by the EU for providing misleading information about its 2014 takeover of WhatsApp. Regulators found it had broken pledges not to match user accounts on both platforms. Earlier this month Bloomberg reported that the social network was under scrutiny from EU antitrust regulators, a move not confirmed by the commission. Amazon is now being formally investigated by EU competition authorities, who are concerned the e-commerce giant could abuse its position as host to tens of thousands of small and medium-sized retailers.



The latest investigation will assess the agreements between Amazon and the thousands of independent retailers that sell goods on its site. After a preliminary investigation launched last year, the commission said Amazon appeared to use “competitively sensitive information” from those independent retailers.

The formal investigation, launched on Wednesday, will study how the use of this data affects competition, with a focus on Amazon’s “buy box”, which allows customers to add items from a specific retailer directly into their shopping carts.

Amazon said in a statement: “We will cooperate fully with the European commission and continue working hard to support businesses of all sizes and help them grow.”

More than 130,000 EU-based small and medium-sized independent traders sell goods on Amazon. There have been some anecdotal complaints that the tech giant is quick to move into bestselling products discovered by these smaller traders.

“E-commerce has boosted retail competition and brought more choice and better prices,” Vestager said. “We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behaviour.

“I have therefore decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”

The commission said the announcement of the investigation did not prejudge the outcome.

Officials want to understand whether Amazon’s dual role as seller and host gives it an unfair advantage, such as knowledge of hit products. The question was whether data was used “to enable or better the service for the smaller guys, or … used in an unfair way by Amazon to compete against the businesses, which they themselves are hosting,” Vestager said in a CNBC interview in March.

The latest investigation follows an earlier antitrust inquiry into Amazon’s dominance in the ebook market, which ended in 2017 with a promise by the retailer to change clauses in its contracts. The company was also ordered to repay €250m in special tax breaks to Luxembourg as part of a clampdown on sweetheart deals.

Vestager, who missed out in the race to succeed Jean-Claude Juncker, will become one of two first vice-presidents in the next commission, but her portfolio remains unclear.