Retail

£1 billion damages claim filed against Amazon by UK retailers in landmark collective action

Published: June 19, 2024
Author: Fashion Value Chain

A £1 billion pound damages claim will be filed today against Amazon on behalf of retailers selling on Amazon’s UK marketplace for illegally misusing their data and manipulating the Amazon Buy Box to benefit its own commercial operation and its overall revenues and profit.

The claim, the biggest collective action ever launched by UK retailers, is being brought by the British Independent Retailers Association (BIRA) on behalf of retailers at the Competition Appeal Tribunal (CAT) in London. It asserts that between October 2015 and the present date, Amazon used data belonging to UK retailers on the company’s marketplace – data that is non-public and belongs solely and specifically to the retailers – in combination with manipulating the Amazon Buy Box, to engage in a product entry strategy that resulted in sales revenue and profits being diverted from these retailers to Amazon.

Such commercially valuable and confidential information helps Amazon decide whether to enter a new product segment based on its earnings and sales potential, which elements of the product to copy, how to price an item, and which consumers to target. That information in combination with the Buy Box, meant Amazon knew it could successfully enter and take away profits from UK retailers.

The retailers, many of whom are small independent UK businesses, were unaware that Amazon was illegally using their data to benefit its own retail operation. Amazon was already charging them a non-negotiable 30% commission on every product sold on the site. By misusing their proprietary data to bring to market rival products that are sold cheaper, Amazon is effectively pushing many of the UK’s independent retailers out of the market.

Amazon has long challenged the suggestion that when it makes and sells its own products, it misuses the information it collects from the marketplace’s third-party retailers. It has similarly challenged that it uses the Buy Box to preference its own retail operations.

However, in 2022 the UK Competition and Markets Authority (CMA) opened a probe into Amazon alleging it was abusing its dominant market position by giving an unfair advantage to its own retail business and retailers that use its services over other third-party retailers on its marketplace. The UK is Amazon’s biggest European market. The CMA raised concerns that Amazon’s access to ‘commercially sensitive data’ relating to third-party retailers could give it an advantage in deciding which products to sell and how to set prices.

In order to avoid a full investigation and detailed decision from the CMA about its conduct, Amazon offered a number of commitments to halt these practices. It also agreed to appoint an independent trustee, approved by the CMA, to monitor the company’s compliance with its commitments going forward. There has been a similar investigation by the European Commission which yielded similar concessions from Amazon.

The claim is being brought by the BIRA, as the proposed representative of the class of retailers selling on the UK marketplace that have suffered loss. BIRA is ‘the voice of independent retailers’ and their leading trade association in the UK.  BIRA also chairs the Independent Retailer Confederation (IRC), an informal group of approximately 20 other small retail associations.

BIRA will today file over 1,150 pages of documents with the CAT that set out the claim against Amazon. This includes a statement from Mr Goodacre explaining why BIRA is bringing the action and how it will manage the claim on behalf of the proposed class of retailers. There is also a report from a leading independent economic expert that supports the claim and a detailed plan for managing the claim, including how the proposed class of approximately 35,000 UK retailers will be communicated with through a claim website, newspapers, magazines and social media.

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