Rakuten, suspected of violating law, must build trust with merchants

Rakuten Group, Inc. is said to have been pressuring merchants on the online shopping mall it operates over the introduction of free delivery. The bullying of merchants is unacceptable.

The Japan Fair Trade Commission has announced that Rakuten has committed acts suspected of violating the Antimonopoly Law.

Rakuten has introduced a system that allows shoppers to receive free delivery if they spend ¥3,980 or more at one store, with the shipping expense borne by the merchant.

While the company says that it leaves the decision up to merchants to choose whether to participate in the program, in reality, some Rakuten salespeople have conveyed to merchants conditions such as, “If you do not participate in the program, you will no longer appear at the top of the site” or “You will be removed from the mall when your contract ends.”

Both of these comments could constitute an “abuse of a superior bargaining position,” which is prohibited under the Antimonopoly Law, and they are unacceptable.

Some of the stores that Rakuten effectively forced to participate in the program were said to be unable to pass on the delivery costs to the retail prices, resulting in a decline in profit, or when they added the delivery costs to retail prices, the more led to a decrease in customers.

In 2019, Rakuten announced the plan to make delivery costs free under certain conditions. After some merchants forced to bear the burden protested that this was a unilateral demand, the JFTC filed in February last year a petition for an urgent injunction with the Tokyo District Court on suspicion the plan violates the Antimonopoly Law.

In response to this, Rakuten supposedly made the system voluntary last March, allowing stores to choose instead of forcing participation.

It would be extremely insincere if Rakuten repeatedly made statements that effectively force merchants in a vulnerable position to participate in the free delivery program despite its supposed change.

Rakuten has promised to take remedial measures in response to the JFTC’s remarks. The company said it would respect merchants’ wishes and ensure that the non-participating stores will not be disadvantaged in search rankings and other matters. The company also plans to establish rules for disciplinary action against employees who engage in problematic activities.

As a result, the JFTC will not take measures such as a cease and desist order and will end its ongoing investigation after confirming the status of improvements. The JFTC must continue to monitor the situation to ensure that promises are kept.

The stronger demand from people staying home due to the COVID-19 pandemic has led to an increase in online shopping, and Rakuten’s influence has grown along with it. It is essential for Rakuten to build a relationship of trust with merchants.

According to Rakuten, 92% of the about 55,000 stores it hosts are participating in the free delivery program.

Shoppers tend to think that accompanying services are free and take it for granted that delivery is free. However, the home delivery industry is suffering from an increase in the amount of packages it handles and a shortage of workers. This should be an opportunity to rethink how to bear the cost of logistics.

— The original Japanese article appeared in The Yomiuri Shimbun on Dec. 14, 2021.