The European Commission suspects that Facebook Marketplace is in breach of the European Union's (EU) antitrust rules, according to a statement issued on Monday.
"Our preliminary concern is that (Facebook owner) Meta ties its dominant social network Facebook to its online classified ad services called Facebook Marketplace," said Margrethe Vestager, executive vice president of the Commission in charge of competition policy.
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"This means Facebook users have no choice but to have access to Facebook Marketplace."
Competitors of Facebook Marketplace could thus be put at a disadvantage as they cannot reach as many potential customers as Facebook Marketplace can.
The Commission argued that Meta unilaterally imposes unfair trading conditions on competing online classified ads services, which advertise Facebook or Instagram.
The Commission is "concerned that the terms and conditions, which authorize Meta to use ad-related data derived from competitors for the benefit of Facebook Marketplace, are unjustified, disproportionate and not necessary for the provision of online display advertising services on Meta's platforms."
"If confirmed, Meta's practices would be illegal under our competition rules," Vestager said.
She referred to the prohibition of abusing a dominant market position, as set in Article 102 of the Treaty on the Functioning of the European Union (TFEU).
The Commission has sent Meta a statement of objections to inform the firm about its preliminary findings. Formal proceedings were opened in June 2021 into Facebook's possible anticompetitive conduct.
If the Commission's concerns stand, Meta could face a fine of up to 10 percent of its total annual global turnover.