Key points

• Marketplace operators that also sell their own products, or sell advertising to the brands on their platform, face questions about whether ranking, data and fees favor the operator.
• Self-preferencing is not unlawful as such. In the United States it is assessed under Section 2 of the Sherman Act and Section 5 of the FTC Act. In the EU and UK, dominance and, for the largest platforms, specific ex ante rules apply.
• Sponsored placement, paid ranking and the use of third-party seller data to inform private label decisions are the most scrutinized practices.
• Pricing parity clauses, most-favored-nation terms and requirements to use the operator's logistics or advertising services can raise separate concerns.
• Documented, consistent and explainable ranking and data policies are the strongest protection, and are worth putting in place before an inquiry.

Why the questions are being asked

Retail media networks have turned many retailers into significant advertising businesses, and marketplaces now host millions of third-party sellers. This brings together three roles in a single company: retailer, platform and ad seller. Competition authorities are interested when the same company controls access to shoppers, decides how listings are ranked, and sells the sellers advertising to improve their position.

The concern is generally framed in two ways. One is that the operator uses its position to favor its own products or services over those of competing sellers. The other is that it uses non-public data about third-party sellers, such as sales volumes, pricing or return rates, to decide what private label products to launch or how to price them. Both ideas have appeared in private litigation and in agency investigations of large platforms in the United States and Europe.

United States

The FTC and a group of state attorneys general have pursued monopolization claims against a major online marketplace, with allegations that include pressure on sellers regarding pricing and conditions tied to access to the platform's logistics services. That case is at the federal litigation stage, and its outcome will shape how courts treat marketplace conduct. For most retailers, which do not hold monopoly power, the Sherman Act risk is lower, but Section 5 of the FTC Act is broader than the antitrust laws, and the agency has shown willingness to use it.

Smaller marketplaces should also consider the Robinson-Patman Act, which concerns price and promotional allowance discrimination between competing buyers. Retail media allowances paid by suppliers can raise questions if they are not offered on proportionally equal terms. Enforcement under the statute has been sporadic, but the agency has revived interest in it.

European Union and United Kingdom

In the European Union, the Digital Markets Act prohibits designated gatekeepers from ranking their own products more favorably than comparable third-party offerings and from using non-public business user data to compete with those users. For companies not designated, Article 102 of the Treaty on the Functioning of the European Union applies to abuse of a dominant position, and national laws in some Member States, including Germany, extend to firms with relative market power or paramount cross-market significance. The Commission has previously found that favoring a company's own marketplace offers in featured positions can be an abuse.

In the United Kingdom, the Digital Markets, Competition and Consumers Act created a regime under which the CMA may designate firms with strategic market status and impose conduct requirements. Retailers that sell on platforms should read our alert on how that regime may affect them. Separately, the CMA applies the Competition Act 1998 and has highlighted fair ranking as an area of interest.

Where retail media creates specific risk

• Pay-to-play ranking. If sponsored placements outrank organic results, shoppers and rivals may be misled unless the labeling is clear, and sellers may argue that they have no choice but to buy advertising.
• Bundling. Requiring sellers to use the operator's fulfillment, payments or advertising to qualify for visibility invites claims of tying.
• Data use. Using seller-level data to inform private label, pricing or assortment decisions should be governed by an information barrier or at least a documented policy.
• Parity clauses. Terms stopping sellers from offering lower prices elsewhere have been challenged repeatedly, particularly broad ones that cover the seller's own website.
• Supplier terms. Linking shelf space, promotional funding or terms of trade to the purchase of retail media can be characterized as coercive.

Managing the exposure

We recommend that marketplace and retail media operators document the objective criteria behind ranking and sponsored placement, and apply them consistently to first-party and third-party products. Data access policies should specify which teams can see seller data and for what purpose, and should be audited. Standard seller and supplier terms should be reviewed for parity, exclusivity and bundling language, with an eye to the markets where the operator may be dominant or designated.

Internal documents deserve care. Many investigations turn on how business teams describe their strategy in presentations and messages. Training commercial teams to describe ranking and data practices accurately, and to involve counsel early when launching new advertising products, reduces the risk of unhelpful characterizations. A short competition review before each major retail media launch is proportionate and inexpensive compared with a regulatory inquiry.