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  • Writer's pictureStuart White

Amazon facing UK investigation

Amazon is preparing for a possible legal challenge over whether it gives itself and sellers using its own services an advantage, compared with the third parties available on its marketplace platform.

News about the investigation broke in the United Kingdom earlier this month. It is being conducted by the watchdog there the Competition and Markets Authority (CMA), which is looking into whether or not Amazon “has a dominant position in the UK and whether it is abusing that position and distorting competition”.

In return, Amazon has said that it will “work closely with the CMA during their investigation” and that sales from its partners continue to grow faster than Amazon’s own retail sales.

The CMA’s statement outlined that the probe will cover three main areas, including how “Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.” It will also look at how the online giant “ sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’”, the prominently displayed one-click purchasing tool on the site. Also under investigation is the criteria for selling under its Prime label, which often includes next-day delivery.

The general counsel at the Competition and Markets Authority Sarah Cardell explained: “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.”

The investigation follows a similar one being conducted by the European Commission, which does not cover ongoing issues affecting the UK now that it has left the European Union following Brexit.

A Reuters investigation published last year, based on leaked internal Amazon documents, claimed that the group ran a systematic campaign to copy goods and manipulate search results to boost its own product lines in India.

Amazon has responded to the statements, saying that more than 50 percent of all products sold via its site are from small businesses,. The company said in a statement: “There are now more than 65,000 small and medium-sized business in the UK that sell on Amazon, supporting more than 175,000 jobs across the country.”

Thompson and Holt managing partner Stuart White says the situation will be interesting to watch unfold. White said: “This is another example that legal entities around the world will not just allow Amazon to conduct itself how it wants. There are clearly sufficient concerns there to mount this investigation, but where it leads will be fascinating to follow.

“There are respected business people that feel that Amazon has too much power, with profit margins minimal once Amazon has had its share. This will be a test of those claims.”

If you have found yourself suspended while selling on Amazon, contact Thompson and Holt for a free LiveChat to get your Seller business back online as quickly as possible.

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