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Amazon Seen Facing EU Antitrust Charges -- WSJ

06/12/2020 | 02:48am EDT

By Valentina Pop in Brussels and Sam Schechner in Paris

The European Union is planning formal antitrust charges against Amazon.com Inc. over its treatment of third-party sellers, according to people familiar with the matter, expanding the bloc's efforts to rein in the alleged abuses of power by a handful of large U.S. technology companies.

The charges -- the EU's first set of formal antitrust accusations against the company -- could officially be filed as early as next week or the week after, one of the people said. The European Commission, the bloc's top antitrust regulator, has been honing its case, and the case team has been circulating a draft of the charge sheet for a couple of months, another person said.

The formal charges, which would come at the same time as Amazon and other tech firms face increased scrutiny in the U.S., would be the commission's latest step in a nearly two-year probe into Amazon's alleged mistreatment of sellers that use its platform. The charges -- called a statement of objections -- stem from Amazon's dual role as a marketplace operator and a seller of its own products, the people said. In them, the EU accuses Amazon of scooping up data from third-party sellers and using that information to compete against them, for instance by launching similar products.

Amazon declined to comment. It has previously disputed that it abuses its power and size and said that retailers commonly sell their own private-label brands.

A decision by the commission on whether Amazon broke competition laws is expected to take at least another year. If the company is found in violation, the commission can force Amazon to change business practices and fine it as much as 10% of its annual global revenue -- or as much as $28 billion based on 2019 figures.

Amazon can challenge any such decision in an EU court.

For the past year, U.S. authorities have also been probing Amazon's alleged anticompetitive behavior. The Justice Department, Federal Trade Commission and Congress are investigating large technology companies, including Amazon, on antitrust matters. Amazon is facing scrutiny over whether it unfairly uses its size and platform against competitors and other sellers on its site.

A Wall Street Journal investigation published in April found that employees at the online retailer at times used data from other sellers to develop competing products. According to former workers, the company sometimes asked an Amazon business analyst to create reports featuring restricted information or using supposedly aggregated data that was derived exclusively or almost entirely from one seller.

The EU's case delves into the same types of conduct, the people familiar with the matter said.

Following the Journal article, a top congressional committee questioned whether Amazon misled Congress in sworn testimony last year, when an executive denied using "individual seller data directly to compete" with other businesses on the platform. Lawmakers have said Amazon hasn't fully responded to requests for information about its relationship to sellers. "Seven months after the original request -- significant gaps remain," a letter to the company said.

Amazon launched an internal investigation, and said that employees using such data to inform private-label decisions would violate its policies.

In Europe, Amazon's alleged behavior is seen as part of a pattern by online platforms to use data to quash rivals. Last year, Margrethe Vestager, the European Commission's vice president in charge of competition and digital policy, launched similar probes into Alphabet Inc.'s Google and Facebook Inc. The two companies have said they are cooperating with the inquiries.

Ms. Vestager has in recent years fined Google over $9 billion for anticompetitive behavior in three separate probes. The cases cover accusations the company used its search engine to steer traffic to its own product ads over rivals', and that it used the control of its Android operating system to force device makers to install its cash-cow search engine onto Android devices. Google is appealing the decisions in the EU's General Court, the bloc's second-highest court.

Critics, such as competing search engines, have argued that large fines have done little to blunt Google's power, however. Ms. Vestager has conceded publicly that fines alone "are not doing the trick" and that reining in tech giants may require new powers and regulations. She plans to put forward regulatory proposals by the end of the year, including powers for the commission to order changes in business practices before a dominant platform quashes its competitors, she has said.

"Our competition enforcement has taught us a lot about the sort of behavior by dominant platforms that can stop the markets which they regulate from working well," Ms. Vestager said in a speech in March. "And we can draw on that experience to design regulations that clearly set out what those platforms can do with their power -- and what they can't."

While these would be the EU's first antitrust charges leveled against Amazon, the company has been in the EU's sights before. In 2017, Amazon settled an EU investigation into its e-book contracts with publishers. That same year, the EU also ordered Luxembourg to recoup EUR250 million ($282.5 million) from the e-commerce company under the bloc's state-aid rules, saying that the Grand Duchy had granted the e-commerce giant illegal state aid in the form of a sweetheart tax deal.

Amazon has appealed that decision in the EU's General Court, where it described the commission's findings as "without merit."

--Dana Mattioli contributed to this article.

Write to Valentina Pop at valentina.pop@wsj.com and Sam Schechner at sam.schechner@wsj.com


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