Japan Regulators Want Rakuten To Shelve Free Shipping Offer

The Fair Trade Commission in Japan (JFTC) has asked eCommerce company Rakuten to delay its plans to offer free shipping, which would take effect on March 18th, according to a report by Bloomberg.

The JFTC said that Rakuten’s new initiative could be a disadvantage to some sellers on the site, and that it is still studying what impact the move would have on the market as a whole. The organization is the watchdog for business practices in the country.

Rakuten has been trying to compete with Amazon, even though it was instrumental in the widespread use of online shopping in Japan. This month, Rakuten revealed that JFTC had started to look into its proposed free shipping program and had asked the company to cooperate.

Rakuten maintains that its proposed free shipping program is in line with antitrust law, and said it plans to stay on schedule to implement the offering.

About a month ago, Chief Executive Officer Hiroshi Mikitani tweeted that free shipping would go forward as planned.

Earlier this month, the JFTC raided Rakuten’s Tokyo headquarters over the free shipping issue. The regulator is concerned that Rakuten is using its market position to take advantage of smaller companies and retailers, many of which rely on Rakuten for their livelihood.

Rakuten wants to make shipping free for orders more than ¥3,980 ($36.26), and it plans to make the merchants absorb the cost of the initiative. The investigation started when about 450 merchants complained that Rakuten was forcing them to pay for their own shipping.

Rakuten also has plans to introduce pricing schemes for a wireless network under construction in Japan, which will make it a competitor against the main three networks in the country.