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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.

Amazon, Government Regulation, Non-US

11 Comments to “Europe’s antitrust chief uses U.S. visit to explain Amazon probe”

  1. ““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.”

    Gee, sounds like she should be going after trad-pub in the EU. 😉

    • Gee why do you think the EU commissioner is going after Amazon?

      To protect the publishing (sorry!) cultural industries from their stupidity.

      The sheer malevolence of publishers (and other cultural creators) to refuse ebooks and audiobooks choices or charge higher prices because KULTUR!(tm) and push paper like meth dealers is really insulting.
      So the protect us from Amazon sob story is simply to save face because they don’t have a clue how to offer what the customer wants and don’t want to because paper is sacred and the smell of new books somehow imparts magical abilities to become cultured!
      xavier

      • Ah, so they’re trying to childproof the world – their trad-pub still acting like little kids when the world doesn’t go the way they think it should. In my neck of the woods we call that bad parenting. 😉

        By protecting the little brats/trad-pub they never learn anything so they never grow up (how old is trad-pub over there?) and they’re never ready to face the real world.

        Jeff on the other hand has done what he could to world-proof Amazon, it knows there are hard things to do and bad people out there, but instead of crying wolf and hiding under the bed Amazon goes out and meets the world head-on.

        At some point the EU trad-pub is going to have to learn to deal with the real world, mommy EU can’t protect them forever …

        • The EU trad-pub crowd doesn’t care about forever. They only care what happens to their companies between now and when they retire.

          • The ones currently in those seats, sure; but the ones replacing them will also care until they retire/cash out and they’ll find it even harder to live in the brave new world the last bunch put them in.

            The training wheels must come off – or they’ll find training wheels are all they have left and no way to move forward.

            Stocking up on the popping corn for January when the EU discovers all the nasty little surprises those new laws have in them that don’t do what most of them were expecting!

  2. adding to my other comment/wisecrack …

    Amazon (and the others) only play in the EU because there’s some possible profit to be made, remove the profit (or fine them for making a profit) and there will be no reason for them to offer their services in the EU.

    We already know Google’s reply: Make us pay to offer links and your links will no longer be offered – it’s cheaper/safer for Google that way.

    I guess Amazon could start having two prices – those in the EU would pay the higher one to help Amazon save up for the next EU fine for doing too good a job without breaking any actual rules/laws.

    • Microsoft did that.
      They raised the price enough to pay off the fine in one year. Then, since the price hike had no effect on sales, they kept it for a net gain.

      Taxing consumer companies is just taxing consumers, especially when they have no competent competitors.

      • “Taxing consumer companies is just taxing consumers, especially when they have no competent competitors.”

        Too bad they never learn from their mistakes. 😉

        Once that pay-to-link bill comes into play, Amazon will be the only thing those in the EU will be able to find!

  3. I feel like the EU is passing all these new tech laws just to get revenue to shore up their crappy economy. It’s no coincidence the most financially successful companies in the world are from the US and it isn’t because they are running amuck.

    • I think they have one final vote on that EU internet thingy in January. Once that goes into effect the EU will disappear as far as the rest of the world in concerned.

      No EU news and no EU blogs as Google and all other searches will come up a blank because they won’t want to pay to link.

      Most businesses will find it more hassle than it’s worth to do online business in the EU (Amazon ‘might’ be able to because of scale, but if they’re going to get fined just for doing too good a job then they might back off as well.)

      The collapse won’t be televised as no one wanted to pay for the rights (and after the collapse there won’t be anyone able to collect on the rights! 😉 )

      • The thing people fail to recognize about protectionism is that if you refuse to adapt to the present you will be incapable of adapting to the future.
        And, like it or not, there will be a future and it will be less like the past than the present.

        All they’re doing is making tomorrow’s competitive landscape even more challenging.

        Just ask Sony, Panasonic, Sharp, etc. Almost all the Japanese consumer electronics companies.

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