Government Regulation

Europe’s antitrust chief uses U.S. visit to explain Amazon probe

29 September 2018

From MarketWatch:

The head of the European Commission’s antitrust authority used a visit to the U.S. to describe in greater detail the latest American tech titan that’s the subject of possible action, Amazon.

As European Union Commissioner for Competition, Margrethe Vestager has had a lot of influence on U.S. technology companies like Google  which was fined $5 billion for violating EU antitrust rules, and Apple, which was ordered to repay over $15 billion to Ireland.

Now she has her eyes on another American company: Amazon.

. . . .

The EU’s investigation into Amazon which was announced last week was flagged as a company that may be in violation of EU antitrust law through an e-commerce sector inquiry Vestager’s commision conducted over the summer.

“We found that there are price maintenance issues where businesses not only give you a recommended price, but they also police that you actually take this recommended price,” Vestager said at a press conference held in Washington D.C. on Thursday.

When it comes to Amazon, she added that there is also a concern centered around how the platform utilizes consumer spending behavior data from the “little guys”, or third-party sellers that sell goods their goods on Amazon. “Since you have thousands and thousands of little guys you get quite a big horizontal picture of what’s going on in the marketplace,” she said, “and that is giving the big guy an advantage that cannot be matched because you have this special access to data.”

. . . .

On her visit to Washington, Vestager also met with Makan Delrahim, the assistant attorney general for the antitrust division, and Joe Simons, chairman of the Federal Trade Commission. “It’s been a very long time since we have had this sort of formal meeting,” Vestager said, “but it was a good way to sort of make a point of information and then of course cooperation will continue.”

“This is about her getting ready for her next job in the EU and it shows she can play a bigger role in the U.S.,” said Roslyn Layton, a visiting scholar at the American Enterprise Institute in Washington, D.C.

Unlike the United States, Layton said that Europe has still not fully recovered from the financial crisis in 2008. “Many people say, ‘Why not make better policy to help growth?’ Well, those things are hard and it doesn’t sound consumer friendly so it is much easier to say let’s go after the big U.S. companies.”

In addition to Amazon, given that the majority of technology companies Vestager has investigated are from the United States, many question whether she intends to use European antitrust policy to weaken U.S. companies to benefit smaller European ones. Be it in the United States or the EU, the goal of any antitrust policy should be to leave consumers better off, said Guido Lobrano, senior director of global policy at Information Technology Industry Council. “It is a reality that tech companies and large groups have originated in the United States because it is favorable to innovation which is not quite the case in Europe,” he said.

Link to the rest at MarketWatch

If PG were in a business and his competitors were selling on Amazon, in addition to watching online pricing and the Sales Rank of his competitors (probably with some technology that automated the process), he would be using this information to inform his own pricing strategies and, where appropriate, to hammer on his suppliers for lower prices.

If a competitor were selling a product below cost, PG might use the opportunity to restock his inventory.

It’s much, much easier to monitor competitor pricing/promotion activities on an ecommerce platform than it is if a competitor is selling through 500 individual physical stores. It costs money to track in-store competitor activities in meatspace (there are companies who will do this for a fee) and generating a physical retail version of Amazon Sales Rank and tracking it over time would be very expensive.