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Mexico Urges Transparency: Amazon and Mercado Libre in Spotlight

 |  February 22, 2024

In a move aimed at fostering fair competition in Mexico’s online retail sector, regulators have urged major players Amazon and Mercado Libre to disclose their algorithms and segregate TV streaming services from their marketplace offerings.

The recommendation comes from Mexico’s Federal Commission on Economic Competition (COFECE) following a preliminary finding that highlighted the dominance of the two firms, controlling a staggering 85% of online marketplace sales in the country, reported ABC.

COFECE’s investigation underscored what it termed as “an absence of real competitive conditions in the online retail market,” signaling concerns over potential stifling effects on smaller competitors and consumer choice. Notably, this recommendation marks another regulatory challenge for Amazon, adding to a series of hurdles it has faced across its global operations.

The scope of COFECE’s recommendation extends beyond Amazon, encompassing Mercado Libre, the largest online retailer in Latin America headquartered in Uruguay. Central to the commission’s concerns is the alleged use of streaming services such as Amazon’s Prime Video as leverage to incentivize consumers into purchasing premium memberships, thereby potentially limiting market access for alternative platforms.

Highlighting the rationale behind the recommendation, COFECE emphasized, “They (streaming services) are an artificial strategy that attracts and retains customers, while at the same time reducing the likelihood that vendors and buyers will use alternative marketplaces.” The commission contends that this practice not only distorts competition but also inflates the barriers for new entrants seeking to penetrate the market.

Related: Amazon Denies Monopolistic Threat in Mexico Amid Regulatory Scrutiny

As part of the corrective measures proposed, COFECE has recommended a separation of memberships from streaming services within a stipulated timeframe of six months, with a potential extension of another six months. Under these guidelines, both Amazon and Mercado Libre would be permitted to offer streaming services independently but prohibited from bundling them with their marketplace offerings. This, COFECE argues, ensures a level playing field for all market participants while promoting transparency and consumer choice.

Furthermore, the commission has called for enhanced transparency measures, particularly regarding the criteria used by online retailers to prioritize and promote certain items on their platforms. COFECE suggests that providing vendors with insights into the selection process would foster certainty and transparency, addressing concerns over potential bias or favoritism in search results.

The recommendations put forth by COFECE signal a concerted effort to uphold competition and consumer interests in Mexico’s burgeoning e-commerce landscape. With Amazon and Mercado Libre at the forefront of online retail in the region, the regulatory scrutiny underscores the importance of ensuring a fair and equitable marketplace for all stakeholders. As these recommendations undergo further review and implementation, their implications are poised to shape the future trajectory of Mexico’s digital economy.

Source: ABC News