Another search. Busy week for UK CMA after confirming Amazon’s investigation into “suspicious anti-competitive practices”
The UK’s Competition and Markets Authority (CMA) has launched an official investigation into concerns over Amazon’s business practices.
In fact, the UK regulator has announced that it will investigate Amazon “with concern that its practices of influencing sellers in the UK marketplace may be anti-competitive and may result in worse deals for customers.”
The CMA investigation comes after Amazon faced two ongoing investigations into its business practices by the European Commission.
Italy’s antitrust watchdog then fined e-commerce giant 1.13 billion euros ($ 1.28 billion) in December, alleging it harmed competing operators in e-commerce logistics services.
The EU Commission has already stated that it has cooperated closely with the Italian Competition Authority in this case within the framework of the European Competition Network to ensure consistency with Amazon’s own two ongoing investigations into business practices.
Amazon strongly disagreed and appealed the Italian fine.
Now the CMA announced its own investigation into the matter on Wednesday, as the EU investigation does not cover ongoing issues affecting the UK because it has left the EU.
CMA noted that some products in Amazon’s marketplace are supplied through its own retail business. However, a large portion is supplied by third party vendors.
The CMA says that Amazon provides services to these vendors, including those that are essential for sales, such as matching vendors with consumers.
It also offers optional services that carry additional fees, such as Amazon’s ‘Fulfillment by Amazon’ service. It manages some aspects of the sales process, including storage, packaging and delivery.
The Competition and Markets Authority (CMA) investigation will consider whether Amazon has an influential position in the UK and whether it is abusing that position and distorting competition by providing an unfair advantage to its own retailers or vendors over others. Third party vendors in the Amazon UK Marketplace.
The CMA said its investigation would focus on three main areas:
- How Amazon collects and uses third-party vendor data, including whether it gives Amazon an unfair advantage in making business decisions made by its retailer.
- How Amazon Sets Criteria for Supplier Assignment as a Choice / First Choice in ‘Buy Box’ The Buy Box is featured prominently on Amazon’s product pages and provides customers with a one-click option for ‘Buy Now’ or ‘Add to Basket’ related to a particular seller’s item.
- How Amazon sets eligibility criteria for sales under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, which 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,” said Sarah Cardell, CMA’s General Counsel.
“This is an important area so it’s important that we carefully investigate whether Amazon is using third party data for an unjust growth in its own retail business and whether it supports vendors who use its logistics and delivery services – both of which could weaken the competition.” Said Cardell.
“Thousands of UK businesses use Amazon to sell their products and it is important that they are able to operate in a competitive market,” says Cardell. “Any loss of competition can lead to losses for consumers and overpayment for their products, offering inferior items or leading to less choice.”
“A formal investigation will allow us to consider this matter properly,” Cardell concluded.
“We will work closely with CMA during their investigation, although we believe we have always worked hard to help small businesses that sell on Amazon succeed, which is in the best interests of both them and us,” an Amazon spokesman told CNBC.
The spokesman added that sales from more than 50 percent of all products sold on Amazon from small businesses and its merchant partners “continue to grow faster than Amazon’s retail sales.”
The CMA said it had not reached a decision at this stage on whether competition law had been violated and would “try to contact the European Commission as it will proceed with its own investigation in the UK.”
The CMA noted that there is an open investigation by Amazon and Google (which began in June 2021) under the Consumer Protection Act for concerns that they are not doing enough to deal with fake reviews on their sites.
The CMA has not yet reached a decision on whether consumer law has been violated.
In May of this year, Amazon said it had taken legal action against four companies for allegedly selling fake reviews on its website internationally.