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 competition 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.

• Japanese large companies stealing IP of SMEs
• Platform providers should pay attention to the moves of Japanese regulations

[Update on February 28 2020] On  February 13 2020, Rakuten made a concession; i.e. they changed the expression from “free shipping” to “shipping fee included” to clear the investigation. However today, JFTC petitioned Tokyo District Court to issue an emergency interim order to Rakuten to stop their system modification, which is planned to start on March 18.

[Update on March 10 2020] On March 6, Rakuten announced that they postpone the introduction of  free shipping for all shops, but they will start it for some shops who accepted this. After all, Rakuten decided not to force the shops to do it. In response to Rakuten’s this announcement, JFTC withdrew the petition for emergency suspension on March 10 2020.  Here is the Rakuten’s press release “Notice Regarding Withdrawal of Petition for Emergency Suspension by the Japan Fair Trade Commission“

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