Independent UK retailers have launched a landmark retail class action, seeking £1 billion in damages from Amazon. The lawsuit, spearheaded by the British Independent Retailers Association (Bira), claims that Amazon has systematically pushed independent retailers out of its online marketplace.
The Allegations Against Amazon
The claim, representing about 35,000 sellers, asserts that from October 2015 to the present, Amazon used non-public data from these retailers to develop and launch its own competing products. Additionally, Amazon is accused of manipulating the “buy box,” a crucial feature where most platform sales occur, to favor its own items over those of independent sellers.
The Impact on Independent Retailers
Bira contends that Amazon’s actions have severely disadvantaged smaller retailers. By charging a non-negotiable 30% commission on every product sold and allegedly using proprietary data to undercut prices, Amazon has effectively driven many UK independent retailers out of the market. “The consequences of Amazon’s abusive conduct have been to inflate its profits and harm the UK retail sector, especially smaller independent retailers,” stated Bira.
Andrew Goodacre, Bira’s chief executive, highlighted the dilemma faced by small businesses. “One might ask, why would an independent retailer use Amazon if it is so damaging to their business? The reality is that consumer buying behavior has shifted significantly, and for small businesses wanting to sell online, Amazon is the dominant marketplace in the UK,” he explained.
Amazon’s Response
Amazon has dismissed the claims, asserting that they are baseless. A spokesperson for the company stated, “Over 100,000 small and medium-sized businesses 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. The fact is, we only succeed when the businesses we work with succeed.”
Regulatory Scrutiny and Previous Investigations
This lawsuit follows an investigation by the UK’s Competition and Markets Authority (CMA) into Amazon’s practices. The CMA examined whether Amazon had given its own brands and those using its logistics services an unfair advantage over third-party rivals. Similar allegations were investigated by the EU Commission.
In response to these investigations, Amazon agreed in late 2022 to provide independent sellers a fair chance in the “buy box” and stopped using third-party sellers’ data to gain a competitive edge. Amazon also allowed sellers to negotiate delivery rates directly with independent providers, fulfilling commitments made to the EU and UK regulators.
Conclusion
The outcome of this unprecedented class action could have significant implications for the retail industry and online marketplaces. As the legal process unfolds, the battle between independent UK retailers and Amazon will be closely watched by businesses and consumers alike. The case underscores the growing tension between dominant online platforms and the smaller businesses that rely on them for market access.
