Amazon is again being investigated by the Competition Bureau in Canada. This time, the bureau is probing the online giant to determine if Amazon engages in any anti-competitive practices on its Canadian marketplace, Amazon.ca.
After an investigation in 2017, Amazon paid a $1 million penalty for misleading pricing practices, often comparing its prices to a regular price, or “list price,” creating the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices.
The current investigation seeks to find if Amazon’s policies and practices are anti-competitive for independent retailers and consumers. This time the penalties could be much steeper. If Amazon is found to be guilty of “abuse of dominance” under the Competition Act, a penalty of $10 million can be imposed, and $15 million for any subsequent charges.
The European Commission is also investigating Amazon regarding competition rules to determine if the company uses data from retailers who sell on Amazon’s marketplace to abuse its dominant position.
Amazon acts as a marketplace and it also acts as a retailer. It can choose which products to sell according to the data it collects.
When a consumer chooses to buy a product on Amazon they add the product to their virtual shopping cart. The product being bought is sold by a retailer who wins the “Buy Box” on Amazon. A retailer on Amazon must win this position to be successful in the Amazon marketplace and how the data collected by Amazon is being used to determine this may affect competition. By adjusting the algorithms, it is possible for Amazon’s products to appear above the other independent retailers on its website.
Amazon is being scrutinized for allegedly penalizing its retailers for offering their products for better prices on other sites. It also allegedly offers better conditions if retailers sell their products on Amazon exclusively.
These investigations could continue for years before Amazon pays any penalties due to their complexity while the competition for online sales continues.
