Canadian small businesses and lawmakers are hopeful the country’s competition watchdog will follow in the footsteps of U.S. regulators and go after Amazon over its business practices.
The U.S. Federal Trade Commission (FTC) and 17 states filed an antitrust lawsuit against the e-commerce giant on Tuesday, accusing it of illegally maintaining a monopoly over the U.S. retail and technology marketplace by stifling competition and squeezing small businesses who use Amazon’s services with exorbitant fees.
The Competition Bureau of Canada announced an investigation into Amazon’s business practices in 2020 — roughly a year after the FTC began looking at the company — but has been silent on its progress since inviting market participants to provide input in August of that year.
The agency declined to comment on the status of its investigation when asked by Global News, only saying it was aware of the FTC’s lawsuit.
A spokesperson for Innovation, Science and Economic Development Canada pointed to the Competition Bureau’s ongoing investigation. The FTC declined to comment on whether it was in contact with its Canadian counterparts.
Amazon said at the time the Competition Bureau’s probe was launched that it was cooperating and would continue to support small businesses that sell products through Amazon.ca. The company did not answer requests for comment this week on the Canadian investigation.
The bureau is specifically reviewing whether Amazon policies impact sellers’ willingness to offer their products at a lower price on other retail channels, such as their own websites or rival online marketplaces.
The bureau is also looking into any efforts by Amazon to tilt consumers toward its own products over those offered by competing vendors, as well as any disadvantage that sellers incur by opting out of Amazon’s shipping, customer relations and advertising services.
The FTC’s lawsuit contains similar allegations. It also alleges that Amazon has sought to “bury” listings from U.S. sellers who are found to be offering lower prices elsewhere, and has allegedly squeezed merchants financially by regularly raising fees charged to businesses that rely on the company’s listing, delivery and storage services.
Amazon has denied wrongdoing and said the FTC’s lawsuit is “wrong on the facts.”
Dan Kelly, CEO of the Canadian Federation of Independent Business (CFIB), told Global News the advocacy organization is due to release a report in the coming weeks collecting data and stories from small businesses on the harms Amazon has had on the Canadian retail marketplace.
“There are some pretty horrible examples of Amazon’s behaviour” in the report, Kelly said, many of which he said align with the FTC’s allegations.
Among the claims is that Amazon will reach out to suppliers of products that are selling well when offered by third-party Canadian businesses, in order for Amazon to sell the same product directly. Those Canadian listings then “seem to disappear” from view, Kelly said.
Amazon’s fee structure is also cited as a concern in the report, he added.
“(We heard from businesses) that the costs were pretty much taking up all of their sales and they were in some cases losing money,” he said.
According to the American anti-monopoly organization Institute for Local Self-Reliance, third-party U.S. sellers who use Amazon spent 45 per cent of their revenue on the fees in the first half of this year — up from 35 per cent in 2020 and 19 per cent in 2014.
Amazon was estimated to control nearly 40 per cent of the U.S. e-commerce market last year, according to market research company eMarketer. The next top 14 companies — including major brands like Walmart, eBay and Target — make up a combined 31 per cent.
In Canada, Amazon’s footprint is even higher, according to eMarketer, accounting for 41.5 per cent of all e-commerce sales this year. The company’s U.S. share remains relatively steady at 37.6 per cent.
The Competition Bureau probe could result in a negotiated settlement, or a case before the Competition Tribunal if the investigation uncovers any contravention of Competition Act provisions. The tribunal could issue an order against Amazon to change its business practices and also issue financial penalties.
An agreement authorized by the Competition Tribunal in 2019 ordered Amazon to pay $1.1 million to settle “concerns” by the Competition Bureau over misleading pricing practices on Amazon.ca. The company was forced to change how it displayed prices to customers as a result.
The NDP’s innovation and small business critic Brian Masse told Global News he wants to see more than a fine imposed on Amazon if the Competition Bureau follows the FTC’s lead.
“This is very much a competition issue for small and medium-sized businesses, but it’s also a social justice issue because it affects real jobs for people at the end of the day,” he said Thursday.
He wants the Competition Act to be strengthened in order to ensure anti-competitive behaviour is not tolerated in Canada, and for the Competition Bureau to have stronger authority to punish companies that break those laws.
Kelly said the CFIB’s report will include a list of recommendations for government and Amazon itself.
The federal government spent over a year consulting with Canadians on how to strengthen the Competition Act. Its report on those consultations, released last week, found strong support for tackling monopolies and oligopolies in the marketplace and loosening the threshold for proving anti-competitive behaviour by dominant companies.
The Innovation, Science and Economic Development Canada spokesperson said Bill C-56 — introduced by the Liberal government last week as a way to enhance competition in the grocery sector — would apply to other sectors including technology and was “the first response” to the Competition Act consultations.
Masse said a more “comprehensive” response is needed to improve the Competition Act.
“We need a full reform of our laws, not this tinkering that the minister is doing right now with C-56,” he said.
Kelly, meanwhile, said businesses that rely on Amazon require more support.
“Nobody’s looking to turn back the clock” to a time before Amazon existed, he said. “But we want to make sure that Amazon is treating small businesses fairly and that there’s a proper dispute settlement where there are problems.”
— with files from the Canadian Press
Comments