At the end of December 2022, the Polish Competition Authority (UOKiK) issued two decisions imposing fines totalling over PLN 210 million (EUR 44.8 million) on Allegro.
The first fine, of more than PLN 206 million (EUR 43.9 million), related to Allegro allegedly abusing its dominant position towards business users on the Allegro.pl platform. The second fine of PLN 3.9 million (EUR 847,000), related to Allegro's use of clauses that UOKiK found, which were prohibited in contracts concluded with consumers.
How the online platform allegedly abused its dominant position towards business users
In its press release, the UOKiK pointed out that Allegro.pl is the largest platform in Poland, with a dominant position in the market for intermediation services in online sales between entrepreneurs and individual customers offered to sellers on e-commerce platforms (70-90% market share).
Allegro competes on its own platform (allegro.pl) with independent sellers by operating its own online store, Allegro Official Store.
According to the UOKiK, the positioning of Allegro Official Store offers was initially unsatisfactory for Allegro because its offers were listed last. So, Allegro started using its insider knowledge on the search matching algorithm and information on buyer behaviour. This positioned Allegro Official Store offers more favourably in search results. Allegro Official Store also had full access to several promotional tools, such as:
- discount coupons,
- a recommendation carousel,
- the ability to change descriptions and parameters of offers after publishing,
- the ability to change the prices of published offers,
- search phrase suggestions and cross-recommendations,
- a returns form, and
- the Allegro Official Store logotype.
The UOKiK noted that independent sellers could not benefit from such supporting options and functionalities, which generated greater sales of Allegro Official Store products and improved the attractiveness of the store's offering. This favouring of its own online store (so-called self-preferencing) was an abuse of Allegro's dominant position. Independent sellers' products were less visible on the platform than those of Allegro Official Store.
The UOKiK argues it was these practices that resulted in Allegro Official Store becoming the largest retailer on Allegro.pl in 2016 (even though Allegro Official Store generated only 1% of all retail sales on Allegro.pl).
Allegro must now decide whether to appeal against the UOKiK's decision to the Competition and Consumer Protection Court. An appeal is likely, as Allegro has already stated that it does not agree with the UOKiK's findings.
The operative section of the decision is available here (in Polish only).
Unlawful amendment clauses applied to Allegro customers
The UOKiK's second decision concerned terms between Allegro and consumers related to the "Allegro Smart!" service. The UOKiK analysed clauses that enabled Allegro to unilaterally amend the terms of services in cases of technological and functional changes, as well as in the event of changes to economic and market conditions. These clauses enabled Allegro to amend contracts unilaterally, without clearly specifying the reasons for the change.
The UOKiK held that such clauses are unlawful, and further, since many consumers enter into contracts with Allegro for at least several months, their contract terms should remain unchanged during the entire period for which they paid in advance.
In this case as well, Allegro must decide whether to appeal against the decision to the Competition and Consumer Protection Court.
The entire non-confidential version of the decision is available here (in Polish only).
Will trade via online platforms become more fair?
The Allegro self-preferencing case has some parallels with the Amazon case, in which the Commission accepted Amazon's commitments not to use marketplace seller data and to ensure equal access to its services, though the two cases led to different outcomes, - a fine imposed on Allegro versus commitments proposed by Amazon and accepted.
Nonetheless, these cases confirm that the EU competition authorities are keeping a close watch on how players running online platforms operate and whether their practices respect competition law rules.
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