COFECE Warns of Amazon, Mercado Libre Dominance in Mexico's E-commerce Market
Mexico's Federal Economic Competition Commission (COFECE) has raised concerns about the dominance of Amazon and Mercado Libre in the country's e-commerce market. The Investigative Authority's (IA) Preliminary Report suggests that the companies' practices could harm consumers and negatively impact operations if certain corrective measures are implemented.
The Report identified three main barriers to competition: 'artificiality' in some components of marketplace membership programs, Buy Box 'opacity', and 'logistics solutions foreclosure'. The IA's analysis concluded that Amazon and Mercado Libre jointly hold an 85 percent share of the sellers' relevant market, alleging market concentration.
However, the Report's market definition was criticized for being artificially narrow and not reflecting the realities of the Mexican retail market. The IA claimed that the lack of interconnectedness among different logistics companies and marketplaces' APIs is a barrier to competition, but Mexican sellers have multiple logistics options. Furthermore, a study by the Computer & Communications Industry Association (CCIA) showed that physical retail competes head-to-head with online retail channels, contradicting the IA's assessment.
The IA recommended major corrective measures against Amazon and Mercado Libre to remove these alleged barriers to competition. The proposed measures could negatively impact the operations of both companies and potentially harm Mexican consumers.
The IA's Preliminary Report has sparked debate about the state of competition in Mexico's e-commerce market. While the Report highlights potential concerns, it has also faced criticism for misconstruing the market and raising questions about the objectives of antitrust enforcement. As the investigation continues, both Amazon and Mercado Libre have the opportunity to respond to the IA's findings and propose alternative solutions.
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