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Amazon and Mercado Libre put barriers to free competition in electronic commerce: Cofece – El Sol de México

The Federal Economic Competition Commission (Cofece) detected possible barriers to competition in retail electronic commercewhich, he said, affect both sellers and buyers.

After an investigation, the antitrust body preliminarily determined that There are no conditions of effective competition in the retail e-commerce market, known as marketplaces, where Amazon and Mercado Libre concentrate 85 percent.

“This market is very important since, since the beginning of the pandemic caused by Covid-19, more and more consumers are using this option to purchase goods or services. Likewise, electronic commerce is key so that small and medium-sized businesses can offer their products to a greater number of consumers,” he stressed.

In accordance with the Mexican Association of Online Sales (AMVO), since 2019 the market value of ecommerce in the country has grown by double digits each year, where 2020, the year of the pandemic, stood out, with an increase of 81 percent.

It is a market where players such as Amazon, Mercado Libre and Shoppe, among others, compete, where the first two are dominant, according to the research.

According to Cofece, electronic commerce in Mexico is highly concentrated as it is made up of few participants, In addition, it is characterized by the presence of network effects, that is, the value of a product or service increases as more people use it.

It also determined that this sector has barriers to entry, such as high amounts of investment for its development, the need for technological tools, as well as investments in advertising, marketing and public relations. Among which he detected three in the country.

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Firstly, he indicated that there is Artificiality in some components of loyalty programs, that is, there are services included in the loyalty programs of some companies, such as streaming services, which affect the behavior of buyers, which that generates an artificial strategy that attracts them.

He also pointed out a lack of transparency in the operation of bid management, which is highlighted through a series of algorithms whose operation could be affecting the efficient functioning of these markets.

Finally, it indicated the preferences for logistics solutions specific to some platforms, which prevents its sellers from freely choosing the logistics company to use based on criteria of convenience, price and shipping time, which favors the exposure of the products of the sellers who contract the service offered by the same platform, incentivizing sellers to acquire the logistics services of the platforms.

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