On 6 June, the British Independent Retailers Association (BIRA) announced the biggest class action lawsuit ever launched by UK retailers, as it filed a £1 billion damages claim against Amazon with the Competition Appeal Tribunal (CAT).
The accusation? That the online giant has been illegally using retailers’ data and manipulating the Amazon Buy Box to benefit its own commercial operations, revenues and profits.
More specifically, BIRA claims that, between October 2015 and mid-2023, Amazon used data belonging to UK retailers – data which 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.
“The retailers, many of which are small independent UK businesses, were unaware that Amazon was illegally using their data to benefit its own retail operation,” stated BIRA.
The organisation continued: “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.
“The consequences of Amazon’s abusive conduct has been to inflate its profits and harm the UK retail sector, especially the smaller independent retailers that are struggling at a time of difficult economic circumstances.”
Not Amazon’s first rodeo
Of course, this is not the first time Amazon’s use of third-party data has been in the spotlight. It has faced – and continues to face – scrutiny from competition authorities in the US and the EU. Meanwhile, in the UK, a 2022 probe by the Competition and Markets Authority (CMA) alleged Amazon was abusing its market position and giving an unfair advantage to its own retail business and retailers that used its services.
This resulted in a 2023 commitment by Amazon to make changes to its marketplace rules in the UK. These included: not using commercially sensitive third-party data to help it make product and pricing decisions for its first-party business; and guaranteeing a level playing field for products featured in the Buy Box.
On 3 November 2023, following a consultation period, the CMA agreed to Amazon’s proposals. Earlier this year, Germany-based Alcis Advisers was confirmed as the Monitoring Trustee charged with ensuring Amazon is complying with its commitments. Alcis is also carrying out a similar role in Europe following an agreement between the e-tailer and the European Commission.
“We’ll continue to ensure that the criteria used to determine the Featured Offer are non-discriminatory and treat sellers and Amazon retail equally,” Amazon UK confirmed in a note on its Seller Central platform.
One UK seller writing on the platform claimed it can “prove” Amazon is not meeting the above commitment, but at least there is now an external monitor to where complaints can be addressed.
The CMA deal has not deterred BIRA from pursuing legal action against Amazon. On the contrary, the trade association said the agreement had enabled Amazon to “avoid a full investigation and detailed decision from the CMA about its conduct”.
According to BIRA CEO Andrew Goodacre: “The British public has a strong relationship with its local, independent retailers and ensuring they are not put out of business by Amazon’s illegal actions is a key driving force behind this collective action.”
He added: “One might ask why an independent retailer would use Amazon if it is so damaging to its business. In reality, we have seen a significant shift in consumer buying behaviour and, if small businesses want to sell online, Amazon is the dominant marketplace in the UK.
“While the retailers knew about the large commissions charged by Amazon, they did not know about the added risk of their trading data being used by Amazon to take sales away from them.”
On the defence
Predictably, Amazon described BIRA’s accusations as “baseless”, saying: “Over 100,000 SMBs in the UK sell on Amazon’s store, more than half of all physical product sales on our UK store are from independent selling partners, and the fact is we only succeed when the businesses we work with succeed.”
At the Amazon Business ABX event in London on 20 June, Fabricio Pedroza, Country Manager of Amazon Business UK&I, was unaware that BIRA had filed a complaint. Speaking to Workplace360’s sister publication OPI, he called the development of its marketplace concept one of the company’s “biggest innovations” in the past 25 years and echoed the corporate PR line about Amazon’s vested interest in seeing third-party sellers succeed.
BIRA predicts a certification hearing before the CAT to allow its complaint to proceed will take place before the end of the year. The association believes a trial could happen sometime in 2026 or Amazon might propose a “fair and reasonable” settlement before then – although neither of those scenarios is guaranteed.
In the meantime, the class action suit has put small retailers and resellers competing against Amazon in the spotlight. They should be leveraging this with customers which value doing business with local companies.
The more the merrier
In addition to BIRA, Professor Andreas Stephan, a competition law scholar and Head of the University of East Anglia Law School, has filed a third-party seller damages action suit against Amazon.
Working with Geradin Partners and litigation funding firm Innsworth, Stephan believes the final claim will be in excess of £2.5 billion. “Amazon has engaged in a variety of strategies to grow its e-commerce platform, lock sellers into it, prevent the expansion of rivals, and use that privileged position to exploit sellers that use its platform,” he stated.
The emergence of this second claim against Amazon is not necessarily good news for BIRA, as its own legal action may now be delayed as a result.
