Amazon investigated over treatment of third-party sellers on UK Marketplace

UK's competition watchdog to investigate how the online giant is using third-party seller data and whether it is using its position to give unfair advantage to its own retail business through anti-competitive practices.

Amazon has this week become the subject of a new investigation from the UK’s competition and antitrust watchdog over concerns over whether it is abusing its position by giving an unfair advantage to its own retail business on Amazon UK marketplace.

The probe, opened by the Competition and Markets Authority (CMA), is investigating Amazon’s use of third-party seller data and whether it is promoting products from its own retail business – or those of sellers that use its services – over other third-party sellers on Amazon’s UK Marketplace.

The CMA will be considering whether Amazon is in a “dominant” position in the UK – and whether it is abusing that position – and promoting unfair competition in practices that could result in a worse deal for consumers – by giving an unfair advantage to its own retail business.

Amazon uses Marketplace to sell some of its own products, but a large proportion of products are sold through third parties. Amazon offers services to these sellers, such as matching sellers with consumers, but also charges fees for additional benefits such as its ‘Fulfilment by Amazon’ service which handles parts of the sales process such as storage, packaging and delivery.

The CMA’s scrutiny follows a current European Commission (EC) investigation over similar concerns. The EC investigation does not cover issues affecting the UK now it has left the European Union, but the CMA will look to liaise with the EC as its own investigation progresses.

Criteria for preferential seller treatment under the microscope

The investigation is covering three main areas. The first concerns how Amazon collects and uses third-party seller information, including whether this gives the retail giant an unfair advantage in relation to business decisions from its retail arm.

How Amazon sets criteria for suppliers to be the preferred choice in its ‘Buy Box’ is the second area under scrutiny. The Buy Box has a prominent display on Amazon product pages – with one-click options for customers to ‘buy now’ or ‘add to basket’ in relation to items from a specific seller. 

Finally, the CMA is probing Amazon’s eligibility criteria for selling under its established ‘Prime’ label, which offers faster or free delivery and are only available to Prime users under Amazon’s Prime loyalty programme.

Sarah Cardell, CMA General Counsel and the watchdog’s incoming interim Chief Executive said: “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. This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.”

“Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice.”