The Japan Fair Trade Commission (JFTC), the country’s antitrust watchdog, searched the Tokyo headquarters of eCommerce giant Rakuten on Monday (Feb. 10) over complaints about its free shipping policy, numerous reports indicated.
The JFTC said Rakuten was breaching anti-monopoly laws by taking advantage of its leadership position over smaller online retailers that rely on its platform, sources said.
To compete against Amazon and other competitors, Rakuten had intended to make shipping free for orders above ¥3,980 ($36.26) starting March 18. The company is planning to make marketplace merchants absorb the costs of the platform’s free shipping service. The investigation follows a January petition from roughly 450 merchants that maintained Rakuten is mandating they pay shipping costs.
Hiroshi Mikitani, president of Rakuten, said in a statement that the company is cooperating during the raid, but still plans to move forward with the shipping policy.
Roughly 49,500 Rakuten sellers set their own shipping fees, and some choose to offer free shipping. Some sellers indicated they wouldn’t be able to stay in business without passing on shipping costs to customers.
The group also requested that JFTC look into allegations that some sellers have to use Rakuten’s mobile payment system and must cover the eCommerce giant’s commissions. There were also complaints about unfair company fines for minor rule infractions.
Rakuten was founded as MDM, Inc. in 1997. The name was changed to Rakuten in 1999 and the firm went public in 2000.
Rakuten said in November that it was going to lose ¥103 billion ($947 million) due to its investment in Lyft. Rakuten’s Founder and CEO Hiroshi Mikitani, who sits on Lyft’s board, said shares in the ride-hailing company had “fallen significantly” from July through September. Rakuten is Lyft’s largest shareholder, with an 11 percent stake.