Dividends and Amazon agrees to changes to settle EU antitrust probes

In all industries, customers want choices, but in all industries the suppliers want the customers to buy the bulk of their goods and services from the supplier. That sounds simple, but suppliers often have relationships or direct ownerships or influence customers to be within their orbit of companies. If a company is not within the orbit, one measure of attempting to increase their sales is to use the government and its agencies to allow more choice.

It is easier to see the tighter orbits with software companies because they can and do offer fewer choices.

In an article by Kelvin Chan and Haleluya Hadero of the Associated Press, Amazon has agreed to change some of its practice in Europe.

In Europe, the governing body is called the European Union and the EU has an antitrust regulator and it tries to ensure choice is offered in Europe. The EU could have potentially fined Amazon with fines worth up to 10% of annual worldwide revenue.

Amazon agreed to a 7-year agreement beginning in June of 2023. The company promised to give products from rival sellers equal visibility in the “buy box”, a premium piece of website real estate that leads to higher sales. European customers will get a second buy box underneath the first box but with a different price or delivery offer.

Amazon is also easing access for merchants and couriers to its Prime membership service. At present, couriers can only deliver Prime parcels if they are approved by Amazon. The change will allow access to more couriers.

Amazon will stop using non-public data from independent sellers on its platform to provide insights on how to compete against those merchants through its own sales of branded goods or private label products.

John E Lopatka, an antitrust scholar and law professor at Penn State University, said the changes happening in Europe could become a precedent for US antitrust regulators.

It is not unusual for companies to be sued for antitrust practices; the competition always thinks the company is doing a monopoly like practices. As investors, you like that, as a consumer may not. Companies that can operate in a monopoly or monopoly like practice can raise prices and remain profitable to pay dividends. If you own them, being an owner is a good thing.

There are more questions than answers, till the next time – to raising questions.

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