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Can eCommerce platform provider require shops to offer free shipping?

Free shipping

Japanese eCommerce platform provider Rakuten announced in the summer of 2019 that free shipping will be offered for purchases over 3,980 JPY (about 36 USD). Rakuten is expecting to achieve this by asking the shops on their platform to bear the shipping costs. 

Rakuten is explaining the intense completion with Amazon and others, and asking for the cooperation of the shops. However, the shops are reacting strongly to this. Reportedly, some company has decided to withdraw from the Rakuten’s eCommerce platform. 

Then, the Japan Fair Trade Commission (JFTC) began investigating this case, and conducted an on-the-spot inspection of Rakuten’s partners on February 10 2020, on suspicion of violating the Anti-Monopoly Act. Rakuten has issued a press release on this matter.

The issue is whether or not eCommerce platform provider requiring the shops to offer free shipping falls under the “abuse of dominant bargaining position” which is prohibited by the Anti-Monopoly Act.

In order to offer free shipping, some shops (especially small shops) will eventually have to set a price of their goods that includes shipping fees. On the other hand, in business, it is rare that both parties have exactly the same negotiating position.

The JFTC’s decision may require many companies to review their business scheme or policy. So, we should pay attention to their decision.

The JFTC has been also investigating other interesting cases which we previously reported as below. Please read if interested.

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