In recent years, the likes of Amazon and, most recently, Alibaba have hit headlines in relation to antitrust and compliance laws, or their lack thereof, to protect suppliers. CEO and founder of Opportunity Network, Brian Pallas, shares his opinion on how regulations should help to create a level playing field for suppliers as well.
The premise of antitrust and compliance laws is to prevent any single business from dominating respective industries. They aim to prevent any predatory action and the bullying of any of the stakeholders within the supply chain to allow for competition within industries.
The digital economy also brings about new challenges in regards to antitrust and compliance. Algorithmic collusion, behavioral discrimination, and abuses must now be taken into account when reviewing and updating laws. They can often be more difficult to regulate.
The digital era has made it progressively more difficult to define what an ‘internet monopoly’ is. Apple’s deal with Google, ensuring Google is the default search engine for all Apple products, has brought about a legal dispute in the US as to whether this now means that Google holds the search engine monopoly.
It has become increasingly clear that there is a need for everyone to be protected by these laws. We should find a balanced way of favoring both consumers and suppliers (especially small businesses), without destroying one or the other.
In 2019, Amazon was found to have been exploiting its suppliers for the benefit of the consumer. The company was accused of using the merchants’ non-public transaction data to compete against them. Amazon was said to control around 50% or more of the US online retail market. The aim of these antitrust laws should be to avoid any stakeholder in the supply chain from being bullied. Lawmakers concluded that Amazon had been bullying the third-party sellers.
A strong example is Alexa. The voice-enabled assistant is sold below cost and encourages customers to use other Amazon products, such as Prime Music. Such competition makes it more difficult for consumers to use external products on the device. Pricing Alexa below-cost makes it incredibly difficult for smaller companies to enter the voice-controlled assistant market.
In a similar vein, just this year Alibaba was fined a record-breaking $2.8 billion for not following antitrust regulations. It was found that Alibaba was punishing their vendors if they sold goods on both Alibaba and rival vendors. They were told to ‘choose one of the two.’ They have now vowed to help said vendors by cutting fees.
The likes of Amazon and Alibaba hold dominant positions within their industries. Therefore, both companies have the capacity to abuse this power, a power that comes at the detriment of the suppliers within the supply chain.
Identifying and tackling issues
In many businesses, policies and procedures are put in place to make certain that the supplier is not strong-armed by anyone into doing things they don’t want to. Businesses must make sure to keep these policies and procedures up to date and ensure that employees are always well informed of them. Employees should be aware of the ramifications if they do not comply with them.
Internal report channels are also beneficial in ensuring that the laws and regulations are followed. These should allow employees and third parties to raise any issues or doubts that they may have regarding compliance and anti-trust. These do not need to be entirely new channels, rather they can be tacked onto existing internal channels. Employees and third parties must also feel comfortable enough to report any issues, they should not feel bullied into doing anything.
Antitrust abuses can come in many forms. Competition is good for business and the economy. However, it has become increasingly clear that antitrust and compliance laws in place in respective countries are needed to protect suppliers as well. Especially when it comes to protecting small businesses that can’t compete against such industry giants.
At Opportunity Network, we strive to create a neutral marketplace where companies can operate without market distortions. The network currently hosts a total deal flow of $400 billion across every industries’ supply chain. We believe in antitrust and compliance laws that will protect all stakeholders. We must create a level playing field for all businesses so that every CEO will have equal access to business opportunities to compete and grow to the best of their ability.
CEO and Founder of Opportunity Network
Brian Pallas is CEO and Founder of Opportunity Network, the invitation-only platform that enables highly-screened CEOs and decision-makers to connect on business deals.