Amazon and Mercado Libre in the spotlight. The Federal Economic Competition Commission (Cofece) has released a preliminary statement denouncing that both companies may be doing business Business practices that would impact the e-commerce sector in the country.
The preliminary opinion of February 6, published this Tuesday in the Official Gazette of the Federation, states: The regulator has warned that Amazon and Mercado Libre are hindering free competition in the e-commerce sector Retail (marketplaces), which harms other sellers and the buyers themselves.
«This market is very important because more and more consumers have been using this opportunity to purchase goods or services since the beginning of the pandemic.«, Cofece argued in a statement in which he reiterated:Amazon and Mercado Libre are the only economic operators that have systems for collecting and processing large amounts of data, which allows them to offer sellers various tools within their platforms. With it, They promote the use of their platforms and thus ensure a sufficient number of users to generate and maintain network effects.«the organization has confirmed.
In this sense, the agency observed that Amazon and Mercado Libre have the largest market shares in e-commerce retail, while the remaining participants accumulate significantly smaller shares: “The behavior of various economic entities participating in the respective sellers’ and buyers’ markets directly affects the conditions of competition and free competition in these markets.«.
Against this background, the regulator has provisionally determined that there are no conditions for effective competition as the marketplaces:
- You have high concentration They therefore consist of a few participants.
- They are characterized by the Presence of network effectsThis means that the value of a product or service increases the more people use it.
- They have barriers to entry, such as large amounts of investment for its development, the need for technological tools; and investments in advertising, marketing and public relations.
Among the obstacles attributed to Amazon and Mercado Libre, Cofece has pointed out Artificiality in some components of loyalty programs of the marketplaces Lack of transparency in how supply management is carried out withinas well as Preferences for your own logistics solutions.
In order to put an end to the situation, the Commission has proposed a series of measures aimed at prevent the dominant market position of Amazon and Mercado Libre from leading to bad practices and benefit SMEs and buyers.
Among them stand out: Disconnect memberships from streaming servicesas well as all other services that are not related to the use of the marketplace and the avoidance of advertising for these within the marketplaces; Create a section on the platforms that informs sellers about the variables the algorithm takes into account to highlight offers. Change the offer management algorithm criteria so that the commissioning of logistics solutions is not viewed as a variable; and make transparent the appropriate standards for the provision of their logistics services while enabling the integration of other solutions into their platforms.
Amazon and Mercado Libre react
After publishing the document Both Amazon and Mercado Libre have issued statements regarding the allegations of the organism. In statements to Expansión, an Amazon spokesperson emphasized that it will continue to work with the Mexican government to ensure the best possible experience for users.
«We have worked closely with Cofece and plan to continue to do so. The pro-competition practices we apply in Mexico promote competition and innovation in the retail sector, which has resulted in a wide range of products, more competitive prices and faster deliveries for our customers, as well as greater opportunities for sellers throughout the national territory‘ he assured.
On your side and in the same line, Free market has stated that it is evaluating the Cofece report and will stick to the final result: “It is important to emphasize that a trial will be carried out on the basis of the published report and, as soon as the file is available, the Cofece plenary session will take a decision and adopt a resolution.” Since this is not an investigation of monopolistic practices, the resolution would not entail economic sanctions«.
The Cofece plenary session is expected to make a final decision on the case in the coming months.