The European Commission has informed Amazon of its preliminary view that its proposed acquisition of iRobot may restrict competition in the market for robot vacuum cleaners (‘RVCs').
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Amazon provides an online marketplace (the Amazon Stores), which allows retailers to advertise and sell products (including RVCs) to customers. Amazon is active as a retailer of various products (including RVCs) on its online marketplace. iRobot manufactures RVCs and sells them also through Amazon's online marketplace.
the Commission is concerned that Amazon may restrict competition in the European Economic Area (‘EEA')-wide and/or national markets for RVCs, by hampering rival RVC suppliers' ability to effectively compete. In particular, the Commission found that:
Amazon may have the ability and the incentive to foreclose iRobot's rivals by engaging in several foreclosing strategies aimed at preventing rivals from selling RVCs on Amazon's online marketplace and/or at degrading their access to it.
This may include:
(i) delisting rival RVCs;
(ii) reducing visibility of rival RVCs in both non-paid (i.e., organic) and paid results (i.e., advertisements) displayed in Amazon's marketplace;
(iii) limiting access to certain widgets (e.g. ‘other products you may like') or certain commercially-attractive product labels (e.g. ‘Amazon's choice' or ‘Works With Alexa'); and
(iv) directly or indirectly raising the costs of iRobot's rivals to advertise and sell their RVCs on Amazon's marketplace.
Amazon may have the ability to foreclose iRobot's rivals because Amazon's online marketplace is a particularly important channel to sell RVCs in France, Germany, Italy, and Spain. RVC customers in these countries particularly rely on Amazon both in terms of product discovery as well as for their final purchasing decision.
Amazon may have the incentive to foreclose iRobot's rivals because it may be economically profitable to do so.
The merged entity would likely gain more from additional sales of iRobot RVCs, than it would lose from fewer sales of iRobot's rivals and other related products on Amazon. Such gains include benefits from additional data gathered from iRobot's users.
Such foreclosure strategies could restrict competition in the market for RVCs, leading to higher prices, lower quality, and less innovation for consumers. ■