Japan's antitrust watchdog will launch an investigation into e-commerce giant Rakuten Inc. after receiving a petition from a group of merchants over the planned free-shipping policy of the company's online shopping mall.
According to the petition organized by around 450 Rakuten marketplace merchants that was signed by 4,000 people, the company is abusing its dominant position by forcing them to shoulder the costs of free shipping for all orders exceeding 3,980 yen ($36) starting March 18.
"Generally speaking, a company in a superior position that causes unjust disadvantage to clients could be deemed to be violating the (antimonopoly) law," Japan Fair Trade Commission Secretary General Shuichi Sugahisa told a press conference.
The merchants also requested that the antitrust watchdog investigate allegations that some sellers were forced to use Rakuten's mobile payment system and shoulder its commissions, as well as claims some were unfairly fined by Rakuten for minor violations of its rules.
"Rakuten is repeatedly changing contract terms for its benefit, while decreasing sellers' profits," said the merchants' representative Yuki Katsumata, 33.
The group is also considering filing a lawsuit against Rakuten to suspend the free-shipping service.
The merchants' lawyer Yoshihito Kawakami said, "If sellers have to bear the shipping costs, it will impose an excessive disadvantage on them and constitute an abuse of superior bargaining position, which is banned by the antimonopoly law."
A Rakuten executive said the company would consider its response, adding, "We will continue our efforts to gain the understanding of sellers."
The merchants' action came as the FTC has been stepping up scrutiny of Rakuten and other tech giants, including Amazon.com Inc., Apple Inc., Google LLC and Facebook Inc., to determine whether they are abusing their market positions.
The government in Japan, as in some other countries, plans to tighten controls on the tech giants to address concerns that their access to massive amounts of customer data could hinder fair competition.
At present, the roughly 49,500 merchants on Rakuten's online shopping mall set shipping fees for items independently, with some providing free shipping.
Small-scale sellers say they cannot survive without passing on shipping costs to customers and the free-shipping policy would make them less competitive than major merchants.
Rakuten officials have argued that free shipping for a minimum purchase amount would increase sales, benefiting merchants in the long term.