Yet another international competition watchdog wants to take a deeper dive into Amazon’s business practices alongside another Big Tech giant. Following in the footsteps of its contemporaries across the larger European Union and Italy, Spain’s National Commission on Markets and Competition (CNMC) is conducting a disciplinary investigation into both Amazon and Apple for “possible restrictive” competition practices.
In particular, the possible unlawful conduct would consist of an agreement between the two tech titans that could have restricted third-party sales of Apple products on Amazon, and also potentially limited some advertising of competing Apple products and some campaigns directed at Apple customers by Amazon.
According to the watchdog, these behaviors could reduce competition of online electronics sales, and strengthen Amazon’s position in providing marketing services to third-party retailers through online marketplaces in Spain.
The regulator said there is evidence that the companies have broken two laws: terms within a “defence of competition” law within Spain and rules within a treaty set by the E.U.
Articles 1 and 2 in Spain’s Competition Act prohibit “collusive conduct” that can prevent, restrict or distort competition, as well as “abuse of a dominant position.” Article 101 of the Treaty on the Functioning of the European Union (TFEU) is similar to Spain’s Article 1 in verbiage, prohibiting companies from engaging in practices that may affect trade between member states and have the objective of “prevention, restriction or distortion of competition within the internal market.”
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The CNMC says it has a maximum of 18 months to conduct the investigation.
An Amazon spokesperson confirmed to Sourcing Journal that the company is fully collaborating with the authorities on this matter.
The Apple-Amazon partnership started in 2018, when Apple first launched an official Amazon store. On the surface, this enabled both companies to eliminate the consumer’s worry about whether they were buying legitimate Apple products on Amazon, particularly since the e-commerce giant has had a history of counterfeit complaints. And as part of the deal, only Apple Authorized Resellers can also sell Apple products via Amazon’s third-party marketplace.
But while these efforts were designed to protect the consumer, other legitimate resellers argue that they lose potential revenue streams if they can’t resell Apple products. Additionally, they argue that an inability to sell used products prevents shoppers from getting the best cost savings.
Last year, Italy’s chief antitrust authority opened a similar investigation into both companies. The Italian Competition Authority (AGCM) is seeking to establish whether Apple and Amazon had reached an anti-competitive agreement to prevent electronics sellers that aren’t official Apple partners from selling its products and Beats headphones.
The United Kingdom’s Competition and Markets Authority (CMA) is reportedly planning a formal competition investigation against Amazon on a larger scale, related to its use of shopper data and how it promotes certain products to sellers, the Financial Times said in June.
E.U. lawmakers in Brussels have already gotten past the investigation stage, filing an antitrust suit against the tech titan for using third-party seller data to inform its strategic business decisions, like reducing product prices.
Similar allegations have been made in the United States, in which the Federal Trade Commission is currently probing Amazon for its use of third-party data. The nation’s capital has taken the biggest step, with Washington D.C. attorney general Karl Racine filing suit against the company for anti-competitive business practices.
The Spain investigation comes as Amazon is making significant investments in the country through its Amazon Web Services (AWS) cloud branch. AWS is investing approximately $3 billion in new data centers in Spain’s northern Aragon region, which are set to open in mid-2022. As Amazon expands in the market, it is building more infrastructure to be able to host data in Spain for its customers who require it.
This will be AWS’s seventh region in Europe, joining existing regions in Dublin, Frankfurt, London, Paris, Stockholm and Milan.
AWS is prepping to invest the amount over a 10-year period, which will go toward the construction of the centers, imports of equipment and operating expenses such as the salaries of the 1,300 employees the company will hire there.
Since 2011, Amazon has invested more than 6.8 billion euros (approximately $8 billion) in its Spanish operations and in 2020 alone in invested 2.5 billion euros (approximately $3 billion). Last year, the e-commerce giant opened two fulfillment centers in the metropolitan areas of Seville and Madrid, as well as three delivery stations in Murcia, Barcelona and Madrid.