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CMA investigates Amazon over suspected anti-competitive practices

CMA investigates Amazon over suspected anti-competitive practices

The CMA is investigating Amazon over concerns that practices affecting sellers on its UK Marketplace may be anti-competitive and could result in a worse deal for customers.

This new investigation follows a current European Commission probe looking into similar concerns, which does not cover ongoing issues affecting the UK now that it has left the European Union.

Some of the products on Amazon’s Marketplace are supplied through its own retail business. However, a large proportion are supplied by third-party sellers. Amazon provides services to these sellers, including those that are essential to make sales, such as matching sellers with consumers. It also offers optional services that incur additional fees, such as Amazon’s ‘Fulfilment by Amazon’ service. This handles some aspects of the sales process, including storage, packaging, and delivery.

The Competition and Markets Authority’s (CMA) investigation will consider whether Amazon has a dominant position in the UK and whether it is abusing that position and distorting 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:

  1. 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.
  2. 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.
  3. 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 programme.
    Sarah Cardell, General Counsel at the CMA, said:

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.

The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.

The European Commission has previously opened two investigations covering the same areas. The CMA will seek to liaise with the European Commission as its own investigation in the UK progresses.

Alongside this case, the CMA also has an open investigation into Amazon and Google, under consumer protection laws, over concerns that they have not been doing enough to combat fake reviews on their sites. The CMA has not reached any conclusions at this stage as to whether or not consumer laws have been infringed.

Source: UK Government


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