Online giant faces largest-yet collective action lawsuit over ‘misuse’ of indie retailers’ data
Retail giant Amazon is facing a £1billion damages claim on behalf of independent retailers selling on its UK marketplace in legal action headed up by the British Independent Retailers’ Association.
BIRA filed the claim on Thursday, 6 June, at the Competition Appeal Tribunal (CAT) in London, saying Jeff Bezos’ company illegally misused retailers’ data and manipulated the Amazon Buy Box to benefit its own commercial operation as well as its overall revenues and profit.
Andrew Goodacre, BIRA ceo, said: “The British public has a strong relationship with its local, independent retailers and ensuring they are not put out of business by Amazon’s illegal actions is a key driving force behind this collective action.
“The filing of the claim is the first step towards retailers obtaining compensation for what Amazon has done.”
The move is the biggest-yet collective action launched by UK retailers under the Competition Act 1998, which was amended in 2015 to enable a collective damages claim to be brought on behalf of a class of people who have suffered loss.
BIRA says the retailers were unaware the data was allegedly being used to help the ecommerce giant determine whether to enter a new product segment based on its sales potential and earnings, which elements of the item to copy, how to price a product, and which shoppers to target.
The organisation has instructed leading international law firm Willkie Farr & Gallagher (UK) LLP on the case, which saw over 1,150 pages of documents filed with CAT and has a special website, where the claim is that the data was non-public and belongs solely and specifically to the UK retailers selling through the online marketplace between October 2015 and 6 June, 2024.
Under the Competition Act 1988, all UK retailers who have lost out and are now domiciled in the UK will automatically become part of the claimant class unless they explicitly opt-out so, once the claim is filed, no action will be required by individual retailers as they will automatically be eligible to receive compensation at the conclusion of the claim.
The association says the data, in combination with the Buy Box, meant Amazon knew it could successfully enter products into the market and take away profits from the retailers, many of which are small independent businesses which were already being charged a non-negotiable 30% commission on every product sold on the site.
The consequences of what BIRA called “Amazon’s abusive conduct” has been to inflate its profits and harm the UK retail sector, especially the smaller independent retailers who are struggling in the current economic circumstances.
Amazon has long challenged the suggestion that, when it makes and sells its own products, it misuses the information it collects from the marketplace’s third-party retailers. It has similarly challenged that it uses the Buy Box to preference its own retail operations.
However, in 2022 the UK Competition & Markets Authority (CMA) opened a probe into Amazon, alleging it was abusing its dominant market position by giving an unfair advantage to its own retail business and retailers that use its services over other third-party retailers on its marketplace.
The UK is Amazon’s biggest European market and the CMA raised concerns that Amazon’s access to “commercially sensitive data” relating to third-party retailers could give it an advantage in deciding which products to sell and how to set prices.
The competition watchdog also alleged that products sold by third-party retailers were less likely to appear in the Buy Box than Amazon’s own products, reinforcing the anti-competitive effect of the giant’s decisions to take sales away from third-party retailers and said the company set itself up through these unlawful practices to maximise the profit it would make and, in doing so, must have known about the damage it would cause to third-party retailers.
Amazon offered a number of commitments to halt these practices and agreed to appoint an independent trustee, approved by the CMA, to monitor its compliance with its commitments going forward. A similar investigation by the European Commission yielded comparable concessions from Amazon.
Andrew added: “One might ask why would an independent retailer use Amazon if it is so damaging to their business? In reality, we have seen a significant shift in consumer buying behaviour and, if small business 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.”
An Amazon spokesperson told Retail Gazette: “We have not seen this complaint but, based on the reporting so far, we are confident that it is baseless and that this will be exposed in the legal process.
“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, and the fact is that we only succeed when the businesses we work with succeed.”
