European Competition Law & Amazon: A Case-based Approach to Abuse of a Dominant Position

Abstract

This Master thesis is centered on Amazon’s potential antitrust violation which have led to a launch of a preliminary investigation in the fall of 2018. The investigation is set to disclose whether Amazon abuses its dual position role, as both operator of a sales platform and a retailer on said platform, to gain a commercial advantage by using data obtained from third-party sellers. The thesis sets of by analyzing the business model of Amazon, and how their role as a multi-sided platform translates into market power, by taking a dynamic approach to the SCP framework and embedding the results in a Porters five forces analysis. It was discovered, that Amazon has a high degree of market power which is related to their ability to enter whichever markets they want and having the ability to act independently on these markets. Next, the relevant market for Amazon Is defined to be the overall e-commerce market in Europe, in order to have a market definition wide enough to capture all factors which contributes to Amazon’s market power. Thereafter, the thesis analyzed whether Amazons behavior constitutes abuse of a dominant position in regard to TEUF article 102. This analysis indicates that Amazon, despite having a low market share, could hold a dominant position due to their strong entry barriers and market power. Subsequently this analysis finds a strong indication, that Amazon is involved in practices that would constitute abuse. However, it is not possible to fully conclude that Amazon Is involved in these practices, with the available data. Finally, the thesis takes a consumer welfare-oriented approach in order to recommend how to deal with the three main problems with the current antitrust regulation in regard to a company like Amazon who are a multi-sided platform. The recommendations on how to effectively apply antitrust regulation to Amazons multi-sided business is firstly to divert from a static to a dynamic approach when defining the market and establishing dominance. Secondly, third-party data should ideally be publicly available, however, the retailer’s reaction to this, suggest that a ban on using the data is the most efficient approach. Lastly, a more future oriented approach, with emphasis on strategic behavior, is needed in order to prevent companies such as Amazon in reaching a critical mass size which is irreversible.