E-commerce giant Amazon has recently reached a comprehensive settlement with the UK competition watchdog concerning its use of Marketplace sellers’ data, agreeing to implement more transparent and fair practices moving forward. However, Amazon is not yet free from scrutiny over these issues.
Today, the British Independent Retailers Association (BIRA), a retailer association with thousands of members, announced it is filing a damages claim against Amazon valued at £1.1 billion ($1.3 billion).
The claim alleges that Amazon has unlawfully exploited members’ proprietary data for competitive purposes. Additionally, BIRA criticizes Amazon’s manipulation of the “Buy Box” to favor certain retailers.
(The Buy Box, as detailed here, is the section where the “Buy Now” and “Add to Basket” options appear. Multiple retailers might offer the same item, so Amazon uses an algorithm to decide which retailer gets the sale at any given time.)
BIRA and its legal team describe the claim as the largest ever collective action initiated by retailers in the UK.
The complaint will be filed today at the Competition Appeal Tribunal in London, covering the period from October 2015 to the present. This start date coincides with the amendment of the Competition Act in the UK to include class action suits.
The case underscores the challenges of the current online retail market: while retailers might prefer direct sales to consumers, they cannot ignore Amazon’s market dominance. Retailers pay a 30% commission to Amazon on every item sold on its platform.
“One might ask why an independent retailer would use Amazon if it is so damaging to their business?” said Andrew Goodacre, CEO of BIRA, in a statement.
“In reality, we have seen a significant shift in consumer buying behavior and, if small businesses want to sell online, Amazon is the dominant marketplace in the UK.
As a result, for small retailers with limited resources, Amazon is the marketplace to start online trading. 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.”
The case is directly connected to a probe launched by the Competition and Markets Authority (CMA) in 2022, investigating whether Amazon was abusing its market position to favor its own retail business over third-party Marketplace sellers.
This included examining whether Amazon accessed “commercially sensitive data” from retailers to inform its pricing strategies and decisions about which sellers are featured in the “Buy Box.”
Amazon ultimately settled with the CMA, avoiding a full investigation and agreeing to appoint a monitoring trustee. With a similar case unfolding in Europe, regulatory scrutiny of Amazon is ongoing.
This new class action allows retailers to voice their grievances and seek redress. BIRA has indicated it will present 1,150 pages of documents as evidence in court.
“This is precisely the sort of claim that the new collective action regime was brought in for, to enable small and medium-sized businesses to recover damages caused to them by a huge multinational, where they would not otherwise have such access to justice,” said Boris Bronfentrinker, a partner at Willkie Farr & Gallagher, the firm representing the retailers.
“The power of Amazon is unrivalled in the vital online world where so much commerce has migrated. Making itself indispensable for retailers, Amazon has then proceeded to harm and financially damage retailers by misusing their confidential data and by prioritizing its own retail operations.
No individual retailer, no matter how large, is willing to confront Amazon, but BIRA has demonstrated its commitment to fighting for UK retailers.
Supported by one of the world’s largest litigation funders and a first-class team of advisors, BIRA aims to secure more than a billion pounds in damages for retailers who were unfairly treated by Amazon.”
Amazon reported $270 billion in gross profits in 2023. The UK is its largest international market, generating $33.6 billion in revenues in 2023 out of a global total of $575 billion.
