Amazon Investigated By UK Antitrust Watchdog
In what is becoming more and more commonplace Amazon is facing another investigation from an Antitrust watchdog, this time from one based in the UK. There is an ongoing investigation currently in the European courts but since Brexit, the UK is no longer covered by European decisions, leading to their own investigations.
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The Competition and Markets Authority’s (CMA) investigation will look into whether Amazon has a dominant position in the UK and whether it is abusing that position and creating unfair competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.
The investigation will focus on 3 main areas:
- How Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.
- How Amazon sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’. The Buy Box is displayed prominently on Amazon’s product pages and provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
- How Amazon sets the eligibility criteria for selling under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, that are only available to Prime users under Amazon’s Prime loyalty program.
“Millions of people across the UK rely on Amazon’s services for fast delivery of all types of products at the click of a button. This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.”
“Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice.”
“A formal investigation will allow us to consider this matter properly.”Sarah Cardell, General Counsel, CMA.
The CMA states that at this time it has not reached any conclusions as to whether or not competition law has been infringed.
The European Commission has previously opened 2 investigations covering the same areas, and the CMA is aiming to liaise with the European Commission and its findings as its own investigation in the UK progresses. You can see the official investigation and case information here.
Is Amazon Using Its Sellers?
For the longest time, it has been very well documented that the risk to sellers of putting all of their eggs in one basket such as the Amazon basket is great from a business point of view. There have been numerous stories in the space of the eCommerce giant going direct to manufacturers and cutting out sellers, as well as pricing others out of the market entirely.
This has been something that has always set Amazon apart as a marketplace as it is also a retailer which has the potential to actively compete with its third-party sellers. Therefore making the claim that they could manipulate their website to favor their own products very possible.
The Founder and CEO of UK marketplace OnBuy had the following to say on the Amazon investigation.
“Any online marketplace that uses third-party seller data to gain an advantage over onsite retailers or favor certain sellers is, by definition, creating an unfair and unequal business environment…This is not the way the industry should operate.”
“Online marketplaces should be a place where retailers and consumers come together. There is no reason why, when operated correctly, marketplaces should not offer shoppers a good deal – and sellers a lucrative platform to trade on.
“Any business practices that actively attempt to promote the opposite by distorting competition should be condemned…As of today, Amazon is subject to an investigation, so it would be wrong to denounce any of their practices at this stage. However, we have faith that the CMA will do its job and get to the bottom of whatever wrongdoing, if any, was committed.”Cas Paton, Founder & CEO, OnBuy.
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Dave is a Co-Founder of eSeller365. For over 10 years he has been involved with eCommerce with a particular interest in the marketplaces and the huge opportunities available for sellers when utilizing a multi-channel strategy. After a year of being the UK’s youngest eCommerce consultant, he built an education platform called UnderstandingE that showed the world how to utilize Magento as the “Third Generation of Multi-Channel software”.
Dave has also created a YouTube channel dedicated to entrepreneurship and eCommerce as well as a podcast dedicated to mental health awareness. When Dave isn’t working his main interests include learning and playing Chess, researching the Crypto and NFT space, and trying to find the nearest beach.