Mexican regulators have taken decisive action against online retail giants Amazon and Mercado Libre, ordering them to disclose their algorithms and implement measures to foster competition in the market. The move comes as Mexico’s Federal Commission on Economic Competition (COFECE) released a preliminary finding indicating that the two companies collectively control a staggering 85% of online sales in the country.
COFECE’s investigation revealed a concerning dominance by Amazon and Mercado Libre, leading to what it termed as an “absence of real competitive conditions” in Mexico’s online retail sector. For Amazon, this development adds to a series of regulatory challenges it has faced globally, underscoring the growing scrutiny faced by tech giants in various jurisdictions.
In response to the findings, COFECE has mandated corrective actions aimed at promoting fair competition and transparency. Among these measures, Amazon is prohibited from using its TV streaming service to entice consumers into purchasing Amazon Prime memberships, a tactic seen as potentially stifling competition. Additionally, the company is required to disclose the selection criteria for promoted items to vendors, ensuring transparency in its operations.
Furthermore, COFECE instructed Amazon to refrain from prioritizing search results based on delivery logistics, addressing complaints from online sellers who felt compelled to utilize Amazon’s delivery services through the Amazon Prime program. This move aims to level the playing field for sellers and prevent unfair advantages based on logistics considerations.
The regulatory order extends beyond Amazon to encompass Mercado Libre, the largest online retailer in Latin America, headquartered in Uruguay. This indicates a broad regulatory focus on fostering competition and fair market practices across the region’s e-commerce landscape.
Both Amazon and Mercado Libre have the option to appeal COFECE’s order, though neither company has yet responded publicly to the directive. However, given the significant market share held by these platforms in Mexico, the regulatory measures are poised to have substantial implications for the e-commerce ecosystem in the country.
This latest development in Mexico follows similar regulatory actions against Amazon in other jurisdictions. In 2023, the U.S. Federal Trade Commission and 17 states initiated an antitrust lawsuit against the e-commerce giant, alleging anti-competitive practices and price inflation in the online marketplace.
As regulatory scrutiny intensifies globally, tech companies face increasing pressure to adhere to fair competition standards and transparency requirements. The actions taken by COFECE underscore the importance of maintaining competitive markets and ensuring a level playing field for all participants in the rapidly evolving digital economy.
