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Amazon investigated over suspected anti-competitive practices

Paloma Kubiak
Written By:
Paloma Kubiak

Amazon is being investigated to find out if it is boosting its own business over third-party sellers on its UK marketplace which could mean shoppers get a worse deal.

The Competition and Markets Authority (CMA) has launched the investigation over concerns that its practices may be anti-competitive.

It will look at whether it is abusing its dominant position 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.

Amazon Marketplace products are supplied through its own retail business or third-party sellers.

As part of its service to these sellers, it matches them with buyers, and for a fee, it offers ‘Fulfilment by Amazon’. This handles some aspects of the sales process, including storage, packaging, and delivery.

The CMA investigation will look into:

  • 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 programme.

Sarah Cardell, general counsel at the CMA, said a formal investigation will allow it to “consider this matter properly”, though at this stage, it has “not reached any conclusions as to whether competition law has been infringed”.

She 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.”

An Amazon spokesperson, said: “We will work closely with the CMA during their investigation, although we believe we’ve always worked hard to help small businesses selling on Amazon to succeed, which is in both their and our best interests. We remain proud of the continued support we provide to businesses of all sizes across the UK. More than 50% of all products sold on Amazon are from small businesses, and sales from our selling partners continue to grow faster than Amazon’s retail sales. There are now more than 65,000 small and medium-sized business in the UK that sell on Amazon, supporting more than 175,000 jobs across the country.”

The CMA added that this latest 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”. The CMA will liaise with the commission as part of its own investigation.

A separate investigation into Amazon and Google is already open over concerns the sites haven’t been doing enough to combat fake reviews.