Japan's antitrust watchdog searched Rakuten Inc.'s head office building in Tokyo on Monday over the internet mall operator's plan to make marketplace tenants shoulder the cost of its proposed free shipping service.
A Rakuten official confirmed the search had taken place and said the company will fully cooperate with the probe.
The Japan Fair Trade Commission launched an investigation last month on suspicion the e-commerce giant is breaching the antimonopoly law by abusing the company's dominant position against smaller online retailers that depend on its platform, the sources said.
The probe came after a group of around 450 merchants filed a petition with the commission in January claiming Rakuten is forcing them to bear the costs of shipping on all orders exceeding 3,980 yen ($36) starting March 18.
Rakuten President Hiroshi Mikitani has said the company will go ahead with the plan despite the petition.
At present, the roughly 49,500 merchants on Rakuten's online marketplace set shipping fees for items independently, with some providing free shipping.
Some small-scale sellers say they cannot survive without passing on shipping costs to customers and the proposed scheme would make them less competitive than major merchants.
But Rakuten officials have argued that the unified free-shipping scheme would increase sales and benefit merchants in the long run.
The group of retailers also asked the watchdog to investigate allegations that some sellers were forced to use Rakuten's mobile payment system and shoulder the e-commerce operator's commissions, as well as claims some were unfairly fined by the company for minor violations of its rules.
The watchdog 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 exploit their superior positions to cause disadvantage to clients.
In a related development, the Japanese government, as in some other countries, has taken steps toward tightening control on the tech giants to address concerns that their access to massive amounts of customer data could hinder fair competition.