COFECE Flags Amazon, Mercado Libre's Dominance in Mexican Online Retail
Mexico's Federal Economic Competition Commission (COFECE) has raised concerns about the online retail market, dominated by Amazon and Mercado Libre. A Preliminary Report by the Investigative Authority (IA) highlights potential barriers to competition and market concentration.
The IA's Report criticises the market definition as too narrow, focusing solely on online marketplaces. It recommends corrective measures against Amazon and Mercado Libre, alleging they create barriers to competition. Despite Amazon's small share (1.5 percent) of Mexican retail sales, dominated by physical stores (88 percent), the IA found these companies jointly hold 85 percent of the sellers' market.
The Report identifies three main barriers: 'artificiality' in membership programs like Amazon Prime and Meli+, Buy Box 'opacity', and 'foreclosure' of logistics solutions. However, Mexican sellers have other logistics options besides Amazon's Fulfillment By Amazon program. Moreover, research shows Mexican consumers use multiple retail memberships simultaneously, contradicting claims of 'lock-in'.
The IA proposes measures such as unbundling membership offerings and allowing any logistics provider to integrate into their APIs. However, these could potentially harm Mexican consumers.
COFECE has initiated an investigation into Amazon and Mercado Libre for potential antitrust violations. The IA's Preliminary Report highlights market concentration and alleged barriers to competition. Corrective measures are proposed, but their impact on consumers remains to be seen. The final Report is expected to provide more clarity on the future of Mexico's online retail market.
