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Competition Law

Analysis - debate - current awareness

12 OCT 2015

Prime position

John Cassels

Partner

Prime position
The online shopping world is changing rapidly and Amazon, in particular, seems to be going all out to lure customers to its online video entertainment nest.

Shifting its focus from sales of CDs and DVD box-sets delivered to our homes, Amazon launched Prime Instant Video, for on-demand and streaming of movies and TV shows. Next, we hear talks of an Amazon live-pay TV service. But the latest move by Amazon - to stop selling Google Chromecast and Apple TV devices on its marketplace from 29 October 2015 - could cause problems for the online retail giant.

The reason for stopping sales of Google and Apple devices is, according to Amazon, because they don't interact well with Prime Video, which could cause customer confusion.

Some argue that Amazon's decision could attract the attention of antitrust watchdogs.

Generally, a company that is dominant on a market and that enhances or exploits its position to the detriment of competitors or consumers will fall foul of antitrust law, unless there is an 'objective justification'. 

Dominance is a prerequisite for the abuse of dominance infringement. In the EU, dominance concerns can arise when a company has a market share of around 40% (and to calculate that share one must first define the relevant market). Other factors, including the market power of competitors, are also relevant. 

Even if dominance exists, it can only be unlawful if coupled with abuse. The line between permitted and unlawful (ie abusive) conduct is often unclear. Generally, for companies that are or may be dominant on a market, any conduct that is designed to, or has the effect of, making market access more difficult for competitors, is likely to be risky.

These are just some of the issues that antitrust watchdogs must weigh if they decide to intervene. In the meantime, perhaps the investigation into Amazon's contracts with book publishers is enough for them to grapple with (see the article from 12 June 2015).

If you would like to discuss these issues further, please do not hesitate to contact us. 

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